Suppose that people expect that the price of orange juice will rise next month.We would predict that the equilibrium quantity of orange juice will ________ and the equilibrium price of orange juice will ________ this month.

Question

Quizplus · Accepted Answer

When people expect the price of a good to rise in the future, they will tend to buy more of the good now in order to avoid paying a higher price later. This will increase the demand for the good and, as a result, the equilibrium quantity will increase. The increase in demand will also put upward pressure on the equilibrium price, causing it to increase as well.

Suppose That People Expect That the Price of Orange Juice