Suppose you produce wooden desks, and government legislation protecting the spotted owl has made it more expensive for you to purchase wood. What do you expect to happen to the equilibrium price and quantity of wooden desks?

Question

Quizplus · Accepted Answer

When the cost of purchasing wood increases, it will increase the cost of production for wooden desks. This will cause a decrease in supply, resulting in a shift of the supply curve to the left. As a result, the equilibrium price of wooden desks will increase, but the equilibrium quantity of desks will decrease.

Suppose You Produce Wooden Desks, and Government Legislation Protecting the Spotted