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 rises substantially, which of the following is most likely to occur?

• A. 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

The correct option is C

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

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