Pam sells hand-shaped soaps at farmer's market. She recently created a revolutionary new soap production technique that doubled her production without having to use more resources.

What changes as a result of Pam's innovation?
Choose 1 answer:
(A) The demand for soap increases.
(B) The demand for soap decreases.
(C) The quantity supplied of hand-shaped soap decreases.
(D) The supply of hand-shaped soap decreases.
(E) The supply of hand-shaped soap increases.

Question

Pam sells hand-shaped soaps at farmer's market. She recently created a revolutionary new soap production technique that doubled her production without having to use more resources.

What changes as a result of Pam's innovation?
Choose 1 answer:
(A) The demand for soap increases.
(B) The demand for soap decreases.
(C) The quantity supplied of hand-shaped soap decreases.
(D) The supply of hand-shaped soap decreases.
(E) The supply of hand-shaped soap increases.

Accepted Answer

∻Solution∻ ‖ a ⋮ Innovation and Production: Pam's new soap production technique allows her to double production without using more resources. ‖ ‖ b ⋮ Supply Curve Shift: An increase in production efficiency shifts the supply curve to the right, indicating an increase in supply at each price level. ‖ ∻Answer∻ ⚹ (E) The supply of hand-shaped soap increases. ⚹ ∻Key Concept∻ ⚹ Supply Curve Shift Due to Technological Innovation ⚹ ∻Explanation∻ ⚹ Pam's innovation in soap production is a technological improvement that increases productivity, leading to an increase in supply, which is represented by a rightward shift of the supply curve. This does not directly affect demand. ⚹◊What effect would Pam's innovation have on the market supply curve for hand-shaped soaps?⍭ Generate me a similar question◊

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