Recent Pine Beetle Infestations That Are Destroying Trees in the Western

question 130

Multiple Choice

Recent pine beetle infestations that are destroying trees in the western provinces are expected to cause the price of lumber to rise in the next six months. As a result, what can we expect to happen to the supply of lumber?

• A) It will fall in six months, but not now.
• B) It will increase in six months when the price goes up.
• C) It will fall now.
• D) It will increase now to meet as much demand as possible.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Price Taker

An entity that accepts market prices as given, without having influence to change the price by its own actions.

Buyer

An individual or entity that purchases goods or services for personal use or ownership rather than for reselling or producing other goods and services.

Seller

An individual or entity that offers goods or services for sale to consumers or other businesses.