Basic microeconomics: supply, demand and substitutes in production The question is: explain the change in the market for skim milk, if demand for ice cream rises.

I'd say these two are unrelated in consumption (saying they're substitutes is kind of stretching it), but complements in production: you extract the cream from whole milk to make ice cream, and the rest becomes skim milk. (Right? Please correct me if I'm wrong.)

Based on this assumption, my answer is that the supply for skim milk will increase (the supply curve shifts right). As demand for ice cream rises, the demand curve for it shifts to the right, and assuming the supply curve for it remains still, this shift will increase both the price and quantity of ice cream. In turn, as ice cream prices rise, producers make more of it, and thus more skim milk.

The thing is, my textbook doesn't describe demand for a complement in production as a factor that shifts the supply curve. So I was wondering, is the reasoning above valid? Thanks.
Sounds pretty good to me. I think it would be more coherent to change the way you say this:


  As demand for ice cream rises, the demand curve for it shifts to the right, and assuming the supply curve for it remains still, this shift will increase both the price and quantity of ice cream. In turn, as ice cream prices rise, producers make more of it, and thus more skim milk.


I would change it to say this:


  As demand for ice cream rises, the demand curve for it shifts to the right, and assuming the supply curve for it remains still, this shift will increase both the price and quantity of ice cream. In turn, the increase in production will cause a upward shift in the supply of skim milk because skim milk and ice cream are "complements in production."


I make this change because you when you say that "this shift will increase both the price and quantity of ice cream" you have already said that the production of ice cream has increased (it increased along the supply curve).