If the Price of Lumber Rises, Then, in the Market

question 335

Multiple Choice

If the price of lumber rises, then, in the market for sawdust

• A) the supply curve of sawdust shifts leftward.
• B) the supply curve of sawdust shifts rightward.
• C) there is a movement downward along the supply curve for sawdust.
• D) there is a movement upward along the supply curve for sawdust.

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Definitions:

Consumer Surplus

The disparity between what consumers are prepared and capable of paying for a product or service, and what they end up paying in reality.

Loss

The negative financial result from an investment or business operations, where expenses exceed revenues.

Regulatory Lag

The delay between the identification of a need for regulatory intervention and the implementation of regulatory policies or actions.

Rate-Of-Return Regulation

Maximum price allowed by a regulatory agency is based on the (expected) rate of return that a firm will earn.