An increase in the price of plastic raises the cost of manufacturing DVRs. As a result, the market changes to a new equilibrium because of a(n):

Question

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An increase in the price of plastic, a key input in the production of DVRs, would increase the cost of manufacturing DVRs. This would lead to a leftward shift in the supply curve for DVRs as suppliers would now require a higher price to produce the same quantity of DVRs. As a result, the market would reach a new equilibrium with a higher price and lower quantity of DVRs being produced and sold. Option A is incorrect because a surplus of DVRs would lead to a decrease in price, not an increase. Option B is incorrect because an increase in demand would lead to a higher equilibrium price and quantity, not a lower quantity. Option C is incorrect because an increase in price of plastic would not lead to a leftward shift in the demand curve for DVRs.

An Increase in the Price of Plastic Raises the Cost