You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (1) the demand (D) for, or supply (S) of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X.Refer to the above.Consumer expectations that the price of X will rise sharply in the future will:

Question

Quizplus · Accepted Answer

Consumer expectations that the price of X will rise sharply in the future will increase the demand (D) for X, since consumers will want to buy more of the product now before it becomes more expensive. This will lead to an increase in equilibrium price (P) and quantity (Q), as the higher demand leads to a higher equilibrium price and quantity. It will not affect the supply (S) of X. Therefore, the correct option is B.

You Are Asked to Determine, Other Things Equal, the Effects