As a result of bad state of nature for your firm's product, you should anticipate a________ price for your product than the current equilibrium price and a________ _ equilibrium quantity than the current equilibrium quantity.

Question

Quizplus · Accepted Answer

When there is a bad state of nature for a firm's product, it means that demand for the product is lower than usual. This leads to a shift in the demand curve to the left, causing a decrease in both the equilibrium price and quantity. Therefore, you should anticipate a lower equilibrium quantity than the current equilibrium quantity. However, since the supply curve remains constant, the decrease in demand will cause a surplus, which typically leads to firms lowering prices to sell off excess inventory. Therefore, you should anticipate a lower equilibrium price than the current equilibrium price. The best choice is B, which states that you should anticipate a higher price and a lower quantity, which is the opposite of what would happen in this situation.

As a Result of Bad State of Nature for Your