A Paper Mill Discovers a Cheaper Way to Get Power

question 146

Multiple Choice

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.

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Definitions:

Quantity Discount

A price reduction offered to buyers purchasing in large volumes or amounts.

Inventory

Materials or goods a business holds for the purpose of resale or production, representing a current asset on the balance sheet.

Operating Expenses

Regular costs incurred in the operation of a business, such as wages, utilities, and rent, excluding cost of goods sold.

Service Company

A business entity that provides services to individuals or other businesses, rather than producing goods.