Buyers scrambled to secure stocks of Australian wool following a forecasted 11 percent decline in wool production.What will happen in the Australian wool market as a result of this announcement?
A)The demand curve for Australian wool will shift to the left in anticipation of higher prices in the future.
B)The demand curve for Australian wool will shift to the right in anticipation of higher prices in the future.
C)The quantity of Australian wool demanded will increase in anticipation of higher prices in the future.
D)The quantity of Australian wool demanded will decrease in anticipation of lower quantities in the future.

Question

Quizplus · Accepted Answer

The announcement of an 11% decline in wool production is likely to lead to a decrease in the supply of wool in the market. As buyers scramble to secure stocks of Australian wool, the demand for Australian wool will increase. This increase in demand is likely to shift the demand curve for Australian wool to the right in anticipation of higher prices in the future.

Buyers Scrambled to Secure Stocks of Australian Wool Following a Forecasted