When stumpage price increases, timber harvest levels and tree planning tend to increase. Why?
When stumpage price increases, timber harvest levels and tree planning tend to increase. Why?
Homework Answers
Since the law of supply stats that there is a direct relationship between price and quantity supplied and other factors which affect the supply remains same.
The supply curve shows the direct relationship between price and quantity supplied.
Stumpage is defined as a price which a private firm pays for the right to harvest timber from a given land area. It is paid to the owner of the land.
Therefore when stumpage price increases, timber harvest levels and tree planning tend to increase because with the increase in the price it is profitable to grow more tree and increase timber harvesting. This follows the law of supply.
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