Suppose the Price of Lumber Decreases

question 60

Multiple Choice

Suppose the price of lumber decreases. In the market for new homes, we would expect which of the following to occur?

• A) the market clearing price will fall and the equilibrium quantity will rise.
• B) the market clearing price will rise and the equilibrium quantity will fall.
• C) both the market clearing price and the equilibrium quantity will fall.
• D) both the market clearing price and the equilibrium quantity will rise.

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