Suppose you are the manager of Big Boards, a firm that produces particle board. To make your particle board, you purchase sawdust from timber farms. During the process of harvesting timber, both lumber and sawdust are produced. If the demand for lumber increases, this will cause the production of sawdust to ______ and the price of sawdust to_____ .
A)increase; rise
B)decrease; rise
C)increase; fall
D)decrease; fall

Question

Quizplus · Accepted Answer

When the demand for lumber increases, timber farms will produce more lumber. Since sawdust is a by-product of lumber production, the production of sawdust will also increase. As the supply of sawdust increases, its price is likely to fall.

Suppose You Are the Manager of Big Boards, a Firm