ECONOMICS
TECHNOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The demand for rice will increase.
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The demand for rice will decrease.
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The demand for rice will be unaffected.
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The supply of rice will increase.
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Detailed explanation-1: -Answer and Explanation: The correct answer is a. The demand for rice will increase, One of the five determinants of demand is the expectation of a change in future prices.
Detailed explanation-2: -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. This is the Law of Demand.
Detailed explanation-3: -What influences demand besides price? Factors like changes in consumer income also cause the market demand to increase or decrease. For example, if the number of buyers in a market decreases, there will be less quantity demanded at every price, which means demand has decreased.
Detailed explanation-4: -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-5: -The Law of Demand Because buyers have finite resources, their spending on a given product or commodity is limited as well, so higher prices reduce the quantity demanded. Conversely, demand rises as the product becomes more affordable. As a result, demand curves slope downward from left to right, as in the chart below.