In 2014, the price of peanuts was rising, which led peanut butter sellers and peanut butter buyers to expect the price of peanut butter would rise in the future. Suppose the effect on the buyers was larger than the effect on the sellers. Consequently, in the current market for peanut butter there is a ________ in the price of peanut butter and ________ in the quantity of peanut butter.

Question

Quizplus · Accepted Answer

When buyers expect the price of peanut butter to rise in the future, they are likely to buy more now before the prices go up, leading to an increase in demand. If the effect on buyers is larger than on sellers, this increased demand pushes the price up and, assuming supply can meet this demand, increases the quantity sold.

In 2014, the Price of Peanuts Was Rising, Which Led