If buyers expect the price of gasoline will be higher in the future, the price of gasoline today ________ and the quantity supplied today ________.
A) falls; increases
B) rises; decreases
C) falls; is unaffected
D) rises; increases
E) falls; decreases

Question

Quizplus · Accepted Answer

Expectations of higher future prices can lead to increased demand today as consumers try to purchase before prices rise, which can push today's prices up. Suppliers may also hold back supply in anticipation of higher future prices, but the immediate effect of increased demand typically leads to an increase in the quantity supplied today as suppliers respond to the current price increase.

If Buyers Expect the Price of Gasoline Will Be Higher