Suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. What would we expect to happen to the equilibrium price and quantity in the market for wheat today?

Question

Quizplus · Accepted Answer

If both buyers and sellers expect the price of wheat to rise in the near future, then they will likely hold their wheat until the price increases. This will decrease the supply of wheat in the market today, causing the equilibrium price to increase. However, it is unclear how this expectation will affect the demand for wheat today, so the impact on quantity is ambiguous. Therefore, the correct answer is D: Price will increase; quantity is ambiguous.

Suppose Both Buyers and Sellers of Wheat Expect the Price