Problem: Consumer-entrepreneurs set up a small-scale production plant on their side of the river, offering competition to the producers on the other side. Unfortunately, without proper licensing this production plant is technically illegal. Accordingly the consumer-entrepreneurs have to sell thier product at a price 20% higher than the producers on the other side. What will happen to the economy now?
a. aggregate demand will increase
b. aggregate demand will decrease
c. aggregate supply will increase
d. aggregate supply will decrease