ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If the price is expected to stay the same, immediate demand will decrease.
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Immediate demand for a good is not related to future price expectations.
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If a good is expected to be plentiful, demand will not be affected.
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Immediate demand will increase, if a good’s price is expected to rise in the future.
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Detailed explanation-1: -One of the demand shifters is buyers’ expectations. If a buyer expects the price of a good to go down in the future, they hold off buying it today, so the demand for that good today decreases. On the other hand, if a buyer expects the price to go up in the future, the demand for the good today increases.
Detailed explanation-2: -SELLERS’ EXPECTATIONS, SUPPLY DETERMINANT: The expectations that sellers have concerning the future price of a good, which is assumed constant when a supply curve is constructed. If sellers expect a higher price, then supply decreases. If sellers expect a lower price, then supply increases.
Detailed explanation-3: -As we can see on the demand graph, there is an inverse relationship between price and quantity demanded. Economists call this the Law of Demand. If the price goes up, the quantity demanded goes down (but demand itself stays the same). If the price decreases, quantity demanded increases.
Detailed explanation-4: -An increase in the price of a product causes an increase in demand for substitute products and a decrease in demand for the product’s complements. Consumer expectations cause people to demand either more or less of a good. A change in the total number of consumers causes the entire demand curve to shift right or left.