Question

New oak tables are normal goods. what would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of the glue used in the production of the new oak tables increased?
a. price will fall, and the effect on quantity is ambiguous.
b. quantity will rise, and the effect on price is ambiguous.
c. quantity will fall, and the effect on price is ambiguous.
d. price will rise, and the effect on quantity is ambiguous.

Answer 1

D. Since the price of the ressources needed to build oak tables will rise (oak wood and glue) the price of the final product will also increase. Also since more buyers enters the market, this leads to potential more demand which could have an effect on the quantity available.