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.

Question

Business

Isla Hawkins

9 January, 08:42

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.

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Answers (1)

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Snuffles · Answer 1

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.