If producers expect future prices to be lower, what is the expected effect on current supply?
Understand the Problem
The question is assessing the relationship between producers' expectations of future prices and the effect on current supply. It examines how producers might adjust their supply based on their forecasts, which is a concept in economics.
Answer
Current supply will increase, shifting the supply curve to the right.
If producers expect future prices to be lower, the current supply is expected to increase, shifting the supply curve to the right.
Answer for screen readers
If producers expect future prices to be lower, the current supply is expected to increase, shifting the supply curve to the right.
More Information
This expectation-driven behavior is because producers aim to sell more at the current higher price rather than waiting for prices to decrease.
Tips
Do not confuse supply with demand; while lower future prices may increase current supply, they typically decrease current demand.
Sources
- Impact of Expectations of Future Prices on Supply Curve - app.jove.com
- Principles of Microeconomics - ecampusontario.pressbooks.pub
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