If suppliers expect prices for their product to rise next year, then one would expect:
A)that this will shift the demand curve for the product right this year.
B)a decrease in the quantity demanded this year.
C)that this will shift the supply curve for the product to the left this year.
D)a shift in the supply curve for the product to the right this year.

Question

Quizplus · Accepted Answer

If suppliers expect prices for their product to rise next year, they will be incentivized to hold onto their inventory and supply less this year, causing a shift in the supply curve to the left. This means that the quantity supplied at any given price will be lower, resulting in higher prices and potentially fewer sales. This does not directly affect the demand curve, so choices A and B are incorrect. A decrease in price would cause a shift in the supply curve to the right (not a increase in price), so choice D is also incorrect.

If Suppliers Expect Prices for Their Product to Rise Next