Question

If a new source of lumber is found, what is likely to happen to the price of
lumber, and why?
O
A. The price is likely to increase because costs of production will
increase.
O
B. The price is likely to decrease because supply has increased.
O
C. The price is likely to decrease because demand will decrease.
O
D. The price is likely to increase because demand will increase.
SUBMIT

Answer 1

Answer:

B. The price is likely to decrease because supply has increased.

Explanation:

A new source of lumber represents increased supply.  According to the laws of supply and demand, an increase in supply leads to a decrease in prices.

The current market price is the equilibrium price.  It is the price that buyers are willing to pay for the quantity that suppliers are offering in the market. In other words, It is the meeting point between the supply and demand-sides in the market. A new source of lumber will increase the supply side, resulting in the curve shift in the supply curve. A new equilibrium with a lower price will be formed in the market.  

Answer 2

Answer:

b.

Explanation: