If consumers expect future prices to be higher

Question

Quizplus · Accepted Answer

If consumers expect future prices to be higher, they tend to stockpile durable products now to avoid having to purchase them at higher prices in the future. This behavior is not seen in perishable products as they cannot be stored for a long time. Hence, option A is not valid. The demand curve for non-durable products like milk, fresh fruits, vegetables etc, remain unchanged. However, as people tend to stockpile durable goods, the demand curve for such goods shifts to the right. Thus option C and D are also incorrect.

If Consumers Expect Future Prices to Be Higher