Question

Rubber is a raw material used to manufacture tires. Several US tire companies import rubber from South America. Rubber comes from trees that grow in tropical areas. During this year’s hurricane season, several strong storms damaged many South American forests. As a result, there is less rubber available than in previous years.

What will most likely happen to the tire industry in the United States?

The price of tires will decrease due to the cost of rubber going up.
The price of tires will decrease due to the cost of rubber going down.
The price of tires will increase due to the cost of rubber going up.
The price of tires will increase due to the cost of rubber going down.

Answer 1

The price of tires will likely increase due to the cost of rubber going up. With less rubber available due to the damage caused by the storms, the costs of producing tires will likely go up, leading to higher prices for consumers.