An article in the Wall Street Journal discussed research at
Ohio State University that may lead to producing carbon
black—an important input in automobile tire making—out
of eggshells, tomato skins, and other food waste. According
to the article, this research could lead to a reduction in the
cost of producing tires.
a. Assuming that the research is successful, use a demand
and supply graph to show the effect of these falling
costs on consumer surplus in the market for tires.
b. Can we be certain whether these falling costs will
increase producer surplus? Briefly explain.
Source: Daniel Akst, “Making Tire Filler from Eggshells” Wall Street
Journal, March 9, 2017.