If a press release reports that the future price of gasoline is expected to rise and suppliers respond more to the change in the expected future price than demanders, which of the following is true?

Question

Quizplus · Accepted Answer

If suppliers respond more to the change in the expected future price than demanders, they will reduce their current supply in anticipation of future higher prices, leading to a decrease in equilibrium quantity. At the same time, the increase in expected future price will lead to an increase in equilibrium price. Therefore, the correct choice is (C) - The equilibrium price will increase and the equilibrium quantity will decrease.

If a Press Release Reports That the Future Price of Gasoline