Question

There are certain areas in the United States, such as the Pacific Northwest, that have large lumber industries. Suppose that the area is devastated by several forest fires, which greatly reduce the supply of lumber. What will the likely effect be on home building companies and their workers?
(A) Lumber prices won't affect how building companies operate or their costs.
(B) Building companies will try to offset higher costs by increasing production.
(C) Companies will build fewer homes and wages will drop.
(D) Lumber workers will seek construction jobs, which will increase wages.

Answer 1

I believe your answer is C.  Because if production of lumber for houses drops.  So does construction rate which leads to lower pay for the workers and if that happens the amount of work done will decrease leading to a steady decrease in production of houses.