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. Consumer expectations that the price of X will rise sharply in the future will

Question

Quizplus · Accepted Answer

If consumers expect the price of X to rise sharply in the future, they will be incentivized to buy more of X now, which will increase demand (D) for X. This will lead to an increase in equilibrium price (P) and quantity (Q) of X, as the market adjusts to the higher demand for X. Therefore, choice B is the correct answer.

In the Following Question You Are Asked to Determine, Other