Over the last three years, Christmas tree prices have increased from an average of $35 per tree to over $75 per tree. How would a on your teamed he tea iday spond to the price change under the colowing dircumstanes? Be sure to expan how your answer depends on the elasticity of supply. acmilla a. The price increase is a result of an increase in demand from younger generations, mainly millennials, increasing their desire to purchase real Christmas trees. The Christmas tree farm and the overall industry will respond as follows b. arl In the short run, the tree farms move down along their marginal cost curves as they have to use fewer inputs. In the long run, producers exit the market as the price is not high enough to cover costs, and they make losses. In the short run, producers earn profits and increase supply. Supply is less elastic in the short run than in the long run. In the long run, the price decreases, and the market returns to its perfectly inelastic curve. The effect of the price increase on the Christmas tree industry will be as follows In the long run, the industry supply curve shifts to the left. In the short run, the tree farms exit the Christmas tree business and grow other lucrative plants. In the long run, as tree farms sell fewer trees, they make losses and exit the industry. In the short run, the increase in price leads to profits for tree farms