Economic principles.docx - QUESTION ONE(1 1 The effect of each event on the supply of timber beams is as follows a When the wage rate of sawmill workers

Economic principles.docx - QUESTION ONE(1 1 The effect of...

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1 QUESTION ONE (1) 1) The effect of each event on the supply of timber beams is as follows: a) When the wage rate of sawmill workers rises, there is a decrease on the supply of timber. This is so because, an increase on the wage of the workers will mean more output on the company’s side and at the same time, more expenditure which would have been avoided if the company had used that money to get some new workers who would have increased the quantity of goods produced and lowered the cost of production. b) When the price of saw dust rises, there will be a decrease on the supply of timber beams. This is because the rise will cause a hike to the cost of production. c) When the price of timber beams rises, the supply of timber beams will increase or better, hike. This is so because, a hike on the price means that there higher chance and likelihood for the producers to generate income and this will make them to increase on their supply and this action to increase their supply will bring about an increase to the timber supplied on the market.
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