Suppose a Tornado Levels Hundreds of Homes

Multiple Choice

Suppose a tornado levels hundreds of homes. As rebuilding begins, how might you analyze the effect this would have on the market for lumber?

A) The demand for lumber would increase, increasing both the equilibrium price and quantity.
B) The supply of lumber would increase, decreasing the equilibrium price and increasing the equilibrium quantity.
C) The demand for lumber would increase, decreasing the equilibrium price and increasing the equilibrium quantity.
D) The supply of lumber would decrease, increasing the equilibrium price and decreasing the equilibrium quantity.