A paper mill discovers that burning old tires is a far cheaper way to get power than using coal,and they quickly adopt the new technology.We can assume which of the following will happen in the market for paper?

Question

Quizplus · Accepted Answer

The paper mill now has a cheaper production cost, which will likely lead to an increase in supply of paper as they are able to produce more at a lower cost. This would result in a shift of the supply curve to the right. However, there is no reason to believe that the demand for paper will be directly affected by the new technology for power generation, so neither A, C, nor D would be an appropriate choice.

A Paper Mill Discovers That Burning Old Tires Is a Far