Suppose that a new technique for harvesting lumber more efficiently was discovered.
i) Illustrate the effect you think this would have on the market for lumber. How will the price and quantity sold of lumber move?
ii) How would this affect the purchasing decisions of competitive firms that make wooden furniture? Why?
iii) How will these changes affect each furniture firm’s output decision? Will more or less furniture get made?
iv) Illustrate the effect you think that all of this will have on the furniture market, and predict the movements on the price and quantity of furniture.