What Is Economic Dependence?
Economic dependence is a situation in which the cost or the revenues associated with a given project are dependent on the cost or revenues generated by another project. The concept is found within companies, industries, and even the economies of different countries. Shifts in any of the factors associated with the two related projects can lead to changes in the profitability and the general stability of one or both of the projects. An example of economic dependence within a business would be the relationship between the cost of producing a specific good and the cost associated with marketing that good to consumers. Production costs have a direct effect on determining the retail price for the good, since the goal is to earn a return on every unit that is sold. Should the price for any of the raw materials used in the production process increase, it will have a direct effect on the amount of profit generated by each sale.
