If consumers expected the price of a good to increase in the near future and the price of a complement good decreased at the same time, as a result:
A)prices would rise.
B)prices would fall.
C)larger quantities to be exchanged.
D)both prices and quantities exchanged would increase.

Question

If consumers expected the price of a good to increase in the near future and the price of a complement good decreased at the same time, as a result:
A)​prices would rise.
B)​prices would fall.
C)​larger quantities to be exchanged.
D)​both prices and quantities exchanged would increase.

Quizplus · Accepted Answer

If consumers expect the price of a good to increase in the near future, they will likely increase their demand for the good in the present, causing an increase in both prices and quantities exchanged. Additionally, if the price of a complement good decreases, this will also increase demand for the original good, leading to a further increase in prices and quantities exchanged. Therefore, both prices and quantities exchanged would increase in this scenario.

If Consumers Expected the Price of a Good to Increase