Question

An increase in the expected future price of the product would be represented by a movement from. A to B.

Answer 1

Expectations of future price increases can cause a present increase in demand, depicted as a rightward shift in the demand curve on a graph.

Step-by-step explanation:

When consumers expect prices to increase in the future, this belief can lead to an increase in demand in the present. Graphically, this can be depicted as a shift of the demand curve to the right. Essentially, if consumers anticipate higher prices later, they are more likely to purchase more now to avoid paying a higher price in the future, causing a current increase in demand. This graphical representation can be seen by drawing a new demand curve to the right of the original curve, indicating higher quantity demanded at any given price. It is important to note that this change is not caused by a change in the actual price of the product, but by a change in the expectations of future prices.

Answer 2

An increase in the expected future price of the product would be represented by a movement from point A to point B.

Step-by-step explanation:

When analyzing the movement from point A to point B in the context of expected future price, it refers to a change in the market's perception of the product's future value. Point A represents the initial expectation, while point B signifies an upward revision in anticipated future prices. This change is often influenced by factors such as increased demand, favorable market conditions, or positive shifts in the overall economic landscape.

In economic terms, this movement can be explained through the principles of supply and demand. If the expected future price of a product rises, it typically signals an anticipated increase in demand or a decrease in supply. According to the law of demand, when the expected price of a product in the future increases, consumers are incentivized to buy more of it in the present to capitalize on lower prices. This behavior contributes to a shift in the demand curve, resulting in an increase in both the equilibrium price and quantity.

Moreover, the movement from A to B can be illustrated graphically. If we consider a basic demand and supply graph, an increase in expected future prices would cause a rightward shift in the demand curve. This shift leads to a new equilibrium point (point B) where both the price and quantity are higher than the initial equilibrium (point A). This visual representation helps to understand the dynamic relationship between expectations of future prices and the current market dynamics.