In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. Consumer expectations that the price of X will rise sharply in the future will:

(1) the demand (D) for X will increase

(2) the equilibrium price (P) of X will Increase (Depending on a shift in the Demand curve)

(3) the equilibrium quantity (Q) of X. will Increase (Depending on a shift in the Demand curve)

Explanation:

Consumer expectations that the price of X will rise sharply in the future will:

1. Trigger the demand for X to increase because it is clear that the price of a good affects the demand, and also true that expectations about the future price do affect demand. For example, if people hear that the product X will be more expensive tomorrow, they may rush to the store to buy X now, and hold off buying tomorrow or else they will spend more money. This is a movement along the demand curve.

2. Cause a Possible Increase in Equilibrium Price: Given that as stated in 3 below, the consumers are willing to buy more at a price higher than the current price but  not as high as the expected increase in price, such will not only cause a shift along the demand curve but it will cause a shift of the demand curve outwards and establish a new equilibrium price.

3. Make the Equilibrium quantity of X to increase: Consumer expectations is a strong determinant of quantity demanded and if price is expected to increase and customers are moved to buy more as a precaution, they may be willing to buy more at a higher price if that price is not as high as the price increase expected; this will put pressure on the demand curve and cause it to shift outwards, thereby establishing a new and higher equilibrium quantity.

answer; swot analysis;

answer; importance to people; or acceptance;