An expectation of a lower price in the future will:

Question

BlackTom AI · Accepted Answer

Expectations about future prices change buyers’ willingness to purchase now. If consumers expect a lower price later, they will postpone purchases, reducing current demand.

1) Relevant knowledge points and concepts
- Demand versus quantity demanded: “demand” is the entire demand schedule/curve (relationship between price and quantity demanded at different prices). “Quantity demanded” is a movement along that curve caused by a change in the current price. 
- Expectations as a demand shifter: information or expectations about future prices (or income, tastes, etc.) shift the demand curve left or right because they change willingness to buy at every current price.

2) Step-by-step reasoning
- Suppose current price is P0. Without any expectation change, consumers plan to buy Q0 at P0.
- If consumers learn price will be lower in the future (Pf < P0), the incentive to buy now falls; many will wait for the lower future price.
- At the same current price P0, fewer units are now demanded, so for each price the quantity demanded is lower than before.
- That is exactly a leftward shift of the demand curve — a decrease in demand.

3) Calculations / intermediate illustration
- Example: before expectation change, at P = $10 demand = 100 units. After learning price will drop, at P = $10 demand = 70 units. The price didn’t change, but demanded quantity at that price declined → demand decreased.

4) Why the correct answer is correct
- Expecting a lower future price reduces consumers’ desire to buy now at any given price, which decreases demand (leftward shift). This is distinct from a change in quantity demanded, which requires a change in the current price.

5) Why other options are incorrect
- (a) increase current demand: opposite of the logical effect. 
- (c) demand stays same but increase quantity demanded: would require current price to fall now, not an expectation of a future fall. 
- (d) demand stays same but decrease quantity demanded: likewise implies a movement along an unchanged demand curve due to current price change, not an expectation effect.

Conclusion: The correct choice is b. decrease current demand.

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An expectation of a lower price in the future will:单项选择题

类似问题

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Imagine the government introduces a new subsidy for measles vaccinations. The government will pay consumers of the vaccination 50% of the vaccination price. Which effect is most likely in the market for vaccinations?

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更多留学生实用工具

希望你的学习变得更简单

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