Question

Assume there's an increase in the price of the wood used in the production of kitchen tables. Illustrate and explain how this would impact the equilibrium price and quantity of kitchen tables. 

Answer 1

Illustration.

Explanation

The increase in price of the wood is an increase in production cost hence it will lead to an increase in the price of the kitchen tables from price (p)to price (p') and a decrease in quantity supply from (q) to (q'). The market equilibrium will also shift as shown.