Let D = demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?
A) D decreases, S no change, P and Q decrease
B) S decreases, D no change, P increases, Q decreases
C) D and S decrease, P and Q increase
D) D no change, S decreases, P increases, Q increases

Question

Quizplus · Accepted Answer

If the governments restrict the amount of forest lands that can be logged, the supply of tropical hardwood trees decreases, causing the supply curve to shift to the left. This leads to an increase in equilibrium price (P) and a decrease in equilibrium quantity (Q) of tropical hardwood trees. The demand (D) for tropical hardwood trees remains unchanged in this scenario. Therefore, option B is the best choice.

Let D = Demand, S = Supply, P = Equilibrium