Brent,a Brilliant Inventor,found a Way to Grind Up Discarded Newspapers

question 30

Multiple Choice

Brent,a brilliant inventor,found a way to grind up discarded newspapers and create a new,far lower-cost,effective plaster.What effect would this innovation have on aggregate supply?

• A)If it is able to replace existing products with its superior characteristics, it will shift SRAS to the right and LRAS to the right.
• B)If it is able to substantially lower the costs of home insulation products, it would shift SRAS to the right but not change the LRAS.
• C)By reducing the demand for existing plaster, it would have no net effect on the SRAS but shift LRAS left.
• D)By providing a readier market to use discarded papers, it would reduce disposal costs for many producers and thereby shift SRAS to the left, leaving LRAS unchanged.

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Definitions:

Single-Price Monopolist

A monopolistic firm that offers its product or service at a single price to all its consumers, without price discrimination.

Price Discrimination

A pricing strategy where similar goods or services are sold at different prices to different groups of people.

Ethnic Group

A community or population made up of people who share a common cultural background, ancestry, or social experience.

Potential Competitors

Firms that are not currently in a market but have the capacity to enter if they choose.