How does producers expectation of a price fall affect the supply curve of a product?...
ECONOMICS
WAEC 2016
How does producers expectation of a price fall affect the supply curve of a product? There will be
- A. a moment along the curve
- B. a leftward shift
- C. no shift of the supply curve
- D. a shift to the right
Correct Answer: D. a shift to the right
Explanation
If sellers expect that the price of the good will be decreasing in the future, then they are likely to sell more today. This causes an increase in supply and a rightward shift of the supply curve.
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