Horti-Business Management

Types of Product – Product relationship

a. Competitive products

• Two products (or enterprises) are competitive when the output of one product can be increased only by reducing the output of the other product. Outputs are competitive because they require the same inputs at the same time. If a farmer has a given level of water for irrigating bhendi and brinjal, he can either allocate equal share of water to both or more of water to bhendi and less to brinjal. Hence, these two products become competitive.
b. Complementary product

• Two products (or enterprises) are complementary if an increase in output of one product (Y₁) also causes an increase in the output other product (Y₂) also, for the same level of inputs. PPC for complementary products have positive slope. Eg: Rotation of complimentary crop in cropping pattern. The by-products of one complementary enterprise (Y₁) will serve as input for production of the other product (Y₂).
c. Supplementary products

• Two products are called supplementary if one product can be increased without increasing or decreasing the other product. These two enterprises are not interlinked. Eg: Farm yard Poultry and Crop cultivation.
d. Joint products

• Products which result from the same production process are termed as joint products. No substitution among products is possible since joint products are produced in a fixed proportion. Eg: cotton lint and cotton seed.
MRPS and enterprise relation ships



MRPS	Enterprise relationship
∆Y2/∆Y1 > O	Complementary
∆Y2/∆Y1 > O	Competitive
∆Y2/∆Y1 > O	Supplementary

iv. Iso-Revenue line or price line

• It is a line which connects all the possible combinations of two commodities which would yield a given level of revenue or income.
v. Optimum Product combination
a) Lesser number of combinations could be analyzed by simple tabular analysis.
b. Algebraic method

• Large number of combinations could analyzed algebraically;
• Value of product given up = value of the product gained
• This means
∆Product given up = Price of product gained
------------------- -----------------------
∆Product gained =Price of product given up

• MRPT = inverse price ratio is the profit maximizing combination.
c. Graphic Method

• With the given data, the production possibility frontier and the iso-revenue line are drawn in the same graph. The point of tangency of production possibility frontier and Iso-revenue line is the profit maximizing combination of two enterprises.