16. if a construction boom leads to an increase in the price of lumber, how will

Question

16. if a construction boom leads to an increase in the price of lumber, how will the higher lumber prices influence the wood furniture market?

a. the demand for wood furniture will decline, and furniture prices will fall

b. there will be a shortage of wood furniture

c. there will be a surplus of wood furniture

d. the supply of wood furniture will decline, and furniture price will increase.

19. when a resource price is below equilibrium

a. excess supply will be present

b. excess demand will be present

c. the supply of the resource will be inelastic

d. the demand for the resource will be inelastic

28. in the short run, the supply of a resource will generally be

a. less elastic than in the long run

b. more elastic than in the long run

c. equally elastic as the supply of the resource in the long run

d. inversely related to the elasticity of demand for the product that the resource helps produce

29. the supply of human capital to a particular use is

a. perfectly incelastic in the short run

b. perfectly elastic in the long run

c. more inelastic in the short run since it takes for persons to acquire a particular skill

d. more elastic in the short run since individuals who already possess the particular skill can be attracted into the labor force in the short run

Explanation / Answer

First question is answered below

16.

Correct option: (d) the supply of wood furniture will decline, and furniture price will increase.

Reason: Since lumber is an input to wood furniture, increase in price of lumber will make production of wood furniture expensive and thus lead to lower profits. Thus firms will reduce their production and supply of wood furniture so that their profits do not fall.

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