Question

Econ

If consumers expect the price of a good to rise in the near future, how would
this most likely affect demand?
О
A. Demand will rise, even after the price rises.
B. Demand will increase before the price rises.
C. Demand will stay the same until the price rises.
D. Demand will fall because the price is expected to rise.

Answer 1

B. Demand will increase before the price rises.

Step-by-step explanation:

If the consumers expect the price of product will soon rise, they will want to accumulate that product at present time while the price is still low. This cause the average demand for the product will start to increase.

But, by the time the time the price of the product increased, there will be less people that can afford to purchase that product like they used to. This is the point where the average demand will started to fall down again.