A paper mill discovers a cheaper way to get power, and they adopt the new technology. Which of the following will likely happen in the market for paper?
A) The demand for paper will increase.
B) The supply of paper will increase.
C) The supply of paper will remain constant.
D) The supply of paper will decrease.

Question

Quizplus · Accepted Answer

By discovering a cheaper way to get power, the paper mill is able to reduce their production costs. This will lead to an increase in the supply of paper, as the paper mill will be able to produce more paper at a lower cost. The increased supply may lead to a decrease in the price of paper in the market. However, it is not certain whether the demand for paper will increase or not.

A Paper Mill Discovers a Cheaper Way to Get Power