If producers expect the price of a good to rise in the near future, what will be the effect on supply?
A) Current supply will increase.
B) Current supply will decrease.
C) Current supply will not be affected.
D) Future supply will decrease.

Question

Quizplus · Accepted Answer

When producers expect the price to rise in the future, they have an incentive to increase their current supply in order to take advantage of the higher prices. As a result, current supply will increase.

If Producers Expect the Price of a Good to Rise