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23 January, 22:43

How do future expectations about the price of a good affect the present supply?

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  1. 23 January, 23:10
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    The Future price of a good is inversely proportional to the present supply

    Explanation:

    The inverse proportionality of the future price of a good to its present supply means that the higher the future price of the good is expected the lower the present supply in the market, while the lower the future price of the good is expected to be the higher the present supply of the good,

    if there are market speculations about a significant change in market price of a particular commodity in the market. the suppliers will tend to create an artificial scarcity of the good/commodity in the market by hoarding that is if the speculations are that the price/market value of the commodity will Riser higher than the current price. but if the prices will fall in the nearest future suppliers will flood the market with excess products.
  2. 23 January, 23:10
    0
    Future expectations about price, can be a demand and supply shifter.

    If producers know that prices will go up in the near future, they will be less likely to produce more now. They will want to sell when prices are higher. The reverse is true, if consumers know that prices will go down in the future they will be less likely to purchase now.
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