What is the market impact if the government restricts logging of forest lands for tropical hardwood trees?

When the government restricts logging of forest lands for tropical hardwood trees, the immediate effect is a decrease in supply. This is because such restrictions limit the number of trees that can legally be logged, thus reducing the quantity available in the market. As supply diminishes while demand remains unchanged (assuming that consumers still desire the same amount of hardwood), a classic market response follows.

In economics, when there is a decrease in supply and demand holds constant, the outcome typically involves an upward pressure on prices. Sellers will respond to the decreased availability of the product by increasing prices, as consumers are still competing for the limited quantity available. Consequently, this situation results in an increase in price and a corresponding decrease in the quantity of hardwood sold in the market, as higher prices typically lead to lower quantity demanded, all else being equal.

Thus, the correct answer outlines the dynamics of supply and demand perfectly in this situation, highlighting the decrease in supply, the constancy of demand, the increase in price, and a decrease in the overall quantity available in the market.