The owner of a paper manufacturer in Seattle, WA is planning next month's production goals. Last month the price of a ton of paper was $625, which increased to $840 this month. According to the law of supply, what would be a rational response of the owner to this change in market price for paper?

Question

Emanuel Pitts

Business

5 December, 11:15

The owner of a paper manufacturer in Seattle, WA is planning next month's production goals. Last month the price of a ton of paper was $625, which increased to $840 this month. According to the law of supply, what would be a rational response of the owner to this change in market price for paper?

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Answers (1)

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Max Duffy · Answer 1

a) Hire additional workers and increase output

Explanation:

As per the law of supply, suppliers will be willing to supply more products in the markets if prices increase. The motive of any business is to make profits. High prices imply high margins and better profits.

According to the information provided, the cost of paper has increased from $625 to $840. A price increment is an opportunity to make more profits for the paper manufacturer. The idea response is for the paper manufacturer to increase production and supply more papers in the market.

The manufacturer may need to hire more workers to increase production.