Question

Because Country A has no domestic sources of wood, it imports all its wood from wood-producing countries. If the price of wood in wood-producing countries increases substantially, which of the following is most likely to occurA Country A will import more wood to meet rising demand.B Country A will impose a tariff on wood imports.C Housing prices in Country A will increase as wood imports become more expensive.D Profits in other wood-producing countries will increase because of increased exports to Country A.

Answer 1

Answer:

C Housing prices in Country A will increase as wood imports become more expensive.

Explanation:

Since country A imports all wood from other countries, an increase in price of wood by suppliers means that they are now expensive. Country A will be paying much more money for the same amount of supply they imported before prices rose. This will lead to housing prices to increase as a way to pass over the costs to homebuyers and tenants through rising home prices and rents respectively.