What effect do computer chip sellers' expectations of falling chip prices in the coming months have on the current computer chip market?
A) The supply of computer chips increases, pushing down the equilibrium price and quantity.
B) The supply of computer chips increases, pushing down the equilibrium price and increasing the equilibrium quantity.
C) The demand for computer chips increases, pushing down the equilibrium price and increasing the equilibrium quantity.
D) The demand for computer chips decreases, pushing down the equilibrium price and increasing the equilibrium quantity.

Question

Quizplus · Accepted Answer

If sellers expect prices to fall in the future, they may increase supply now to sell at higher current prices, leading to a lower equilibrium price and higher equilibrium quantity.

What Effect Do Computer Chip Sellers' Expectations of Falling Chip