If both buyers and sellers expect the price of a commodity to rise 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

When both buyers and sellers expect the price of a commodity to rise in the future, the demand for the commodity increases as buyers rush to buy the commodity before the price goes up. As a result, the market clearing price will increase and the equilibrium quantity cannot be predicted, as it will depend on the magnitude of the change in demand and supply.

If Both Buyers and Sellers Expect the Price of a Commodity