Question

"Some people predict, however, that the prices of chocolate will increase drastically in about three years because of some unhealthy crops." Given this expectation for the future, what will happen to the demand of chocolate now? The demand will:a. decrease as people switch to substitute goodsb. increase as consumers buy more now to avoid higher prices laterc. decrease; when prices increase, demand decreasesd. stay the same as consumers plan to adjust to the prices in the future

Answer 1

Answer:

The correct answer is option b.

Explanation:

As consumers expect the price of chocolates to increase in the future, they will purchase more currently to avoid paying a higher price in the future. This will cause the current demand for chocolates to increase.

This increase in demand will cause the demand curve to shift to the right.

On the contrary, if the future price was expected to decrease, this would have caused the current demand to decrease.