If both buyers and sellers expect the price of a commodity to fall in the future, it is likely that the market clearing price ________ and the equilibrium quantity ________.
A) will fall, cannot be predicted
B) will rise, cannot be predicted
C) cannot be predicted, will fall
D) cannot be predicted, will rise

Question

Quizplus · Accepted Answer

If both buyers and sellers expect the price of a commodity to fall in the future, they will try to sell as much as possible before the price falls further. This will increase the supply of the commodity in the market, which will result in a fall in the market clearing price. The equilibrium quantity cannot be predicted with certainty as it depends on the specific factors affecting demand and supply.

If Both Buyers and Sellers Expect the Price of a Commodity