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. Refer to the given information.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, this will increase their desire to purchase X before the price rise occurs. This will cause an increase in demand (D) for X, shifting the demand curve to the right. As a result, equilibrium price (P) and equilibrium quantity (Q) will both increase. However, the expectation of a future price rise will not affect the supply (S) of X, so option A and C can be eliminated. Additionally, the expectation of a price rise will not cause a decrease in price, so option D can also be eliminated. Therefore, the correct answer is B.

In the Following Question You Are Asked to Determine,other Things