Lumber Prices Fall in Calgary, Alberta, Because New Forests Are

question 153

Multiple Choice

Lumber prices fall in Calgary, Alberta, because new forests are opened for harvesting in nearby British Columbia. As a result, what might you expect to find in the Calgary housing industry?

• A) Less labour will be used to construct homes as wages fall relative to the price of lumber.
• B) Less wood will be used in the construction of new homes because the price is now cheaper.
• C) Steel frames for houses are replacing wood frames because wood is considered a cheap substitute.
• D) More wood is being used in the construction of new homes.

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Definitions:

Economic System

The structure of methods and principles a society uses to produce and distribute goods and services.

Price Mechanism

The way in which the forces of supply and demand determine the price of goods and services in a free market.

Efficient Allocation

The process where resources are distributed in a manner that maximizes the net benefits attained through their use.

Socialist Economy

An economic system where the production, distribution, and exchange of goods and services are controlled by the government with the aim of reducing inequality.