What is the effect on the price and quantity of wooden desks of a rise in the price of wood?

Question

Quizplus · Accepted Answer

A rise in the price of wood will increase the cost of producing wooden desks, which is likely to decrease the supply of wooden desks, shifting the supply curve to the left. At the same time, the increase in cost is likely to reduce the demand for wooden desks, shifting the demand curve to the left. The intersection of the new demand and supply curves will result in a new equilibrium price and quantity. The decrease in both supply and demand will lead to a decrease in the equilibrium quantity of wooden desks, and an increase in the equilibrium price. Therefore, option D is the correct answer.

What Is the Effect on the Price and Quantity of Wooden