If an increase in the price of crude oil led to an increase in the prices of kerosene and grease, then kerosene and grease are in

Step 1: Analyze the question Crude oil is the raw material. When its price rises, the prices of kerosene and grease (both products derived from crude oil) also rise. The question asks what type of supply relationship exists between kerosene and grease.

Step 2: Concept

• Joint supply: Two or more goods are produced from the same raw material or process, so supplying more of one automatically yields the other. Examples are beef and hides, or petrol, kerosene and diesel from crude oil.
• Competitive supply: Goods that use the same resources, so producing more of one means producing less of the other (e.g., yam and cassava on the same farmland).
• Composite supply: One good with several uses, where the uses compete for the same supply (e.g., timber for furniture and for building).
• Market supply: The total quantity of a single good that all producers offer at a given price.

Step 3: Apply Kerosene and grease both come from crude oil, and a change in crude oil affects both together. They are by-products of the same source, so this is joint supply.

• B is wrong because the products do not compete for the crude oil in a way that makes producing one reduce the other. They come out of the same refining process together.
• C is wrong because market supply refers to one good, not related goods.
• D is wrong because composite supply is about one commodity with different uses.

Answer: A. joint supply

Exam tip: When you see goods coming from the same raw material, think joint (e.g., "crude oil gives many products," "cattle gives beef and hides"). When goods compete for the same land or resources, think competitive.