If a firm has an incentive to increase supply now and decrease supply in the future, the firm expects that the:
A)price of its product will be lower in the future than it is today.
B)demand for the product will be lower in the future than it is today.
C)price of inputs will be lower in the future than they are today.
D)price of its product will be higher in the future than it is today.

Question

Quizplus · Accepted Answer

If the firm has an incentive to increase supply now and decrease supply in the future, it implies that the firm expects the price of its product to be lower in the future than it is today. This expectation would lead to the firm increasing supply now in order to capture the higher price, and decreasing supply in the future to avoid the lower price.

If a Firm Has an Incentive to Increase Supply Now