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

The correct answer is A because when people expect the price of a good to rise in the future, they will buy more of the good now in order to avoid paying a higher price later. This will increase the equilibrium quantity of the good. The increase in demand will also lead to an increase in the equilibrium price of the good.

Suppose That People Expect That the Price of Orange Juice