In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X.
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Consumers expect that the price of X will rise sharply in the future. At the same time, technology used in producing X improves. When both of these occur, what outcome will occur with greatest certainty?

Question

Quizplus · Accepted Answer

The expectation of a future price increase will raise current demand, while technological improvements will increase supply. The equilibrium quantity will increase, but the effect on price is uncertain due to opposing forces on demand and supply.

In the Following Question You Are Asked to Determine, Other