Question 15 of 28 Incorrect x Incorrect x Map sapling learning Lumber and brick

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Question 15 of 28 Incorrect x Incorrect x Map sapling learning Lumber and brick are substitutes in home construction. Consider the market for bricks depicted below. Suppose the price of lumber increases due to new regulations for the logging industry. Illustrate the impact this will have on the market for bricks. The Brick Market Equilibrium price O ncreases O decreases Supply O remains constant O change is ambiguous Equilibrium quantity O increases o decreases O remains constant O change is ambiguous Demand Quantity O Previous Give Up & View Solution Check Answer Next Ext Hint

Explanation / Answer

In subsitute goods, when the price of one good and the demand of ohter good are directly related, when the price of one good increases the demand of the other good increases as the pirce of other good automatically becomes relatively lower then earlier or the price gap decreases from earlier.

So the impact on he Bricks market will be as follows : (asssuming supply being constant)

1. The Demand of Bricks will increase,

2. The demand curve for Bricks will shift to right,

Ex. price of both being $10 per unit. (units being idintical in utility). Now when price for Lumber becomes $12 the price of Bricks becomes automatically lower by $2.00 per unit. so the demand of Bricks will increase according to its elasticity, but will increase for sure, both being subsitute goods.

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