Describe any four principles of combining enterprises in a product-product decision(s).

      

Describe any four principles of combining enterprises in a product-product decision(s).

  

Answers


Abdullahi
a) Joint product- for example two products are combined because one cannot be produced without the other for example the production of mutton and wool.

b) Complementary products

There will be complementarity among two enterprises with a change in a level of one the other changes in the other direction. By increasing the production of an enterprise you automatically produce more of the other.

c) Competitiveness enterprise

Competition exists between enterprises when the output of one can be increased by reducing the production of the other enterprise and vice versa for example production of dairy product and crop product.

The production of one enterprise affects the production of the other inversely. Competitiveness enterprises compete for farm resources and substitute for the other. Some amount of one product must be given up to increase the level of production of the other.

Marginal rate of substitution between the two products is negative. The two products may substitute constant, decreasing or increasing rate.

d) Supplementary enterprises

Supplementary relationship exists when increase or decrease in the level of one product does not affect the production level of the other product for example production of wheat and maize in relation to land, the farmer can also purchase feeder stock and feed livestock using the land space to grow other crops rather than feeder stocks.

e) Independent enterprises
These are production enterprises which do not have a direct relationship on each other. Each product is treated separately.
Dullayo answered the question on May 1, 2018 at 20:52


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