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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Definitions:

Unlimited Personal Liability

A legal structure in certain business types where owners are personally responsible for all of the business's debts, without any limit on the amount for which they can be liable.

Corporate Form

A legal structure for businesses that is recognized as a separate entity from its owners, providing limited liability protection.

Limited Liability

This is a legal structure that protects business owners' personal assets from being used to pay off business debts and liabilities.

Financial Information

Data related to the financial status of a company, including income statements, balance sheets, and cash flow statements.