If Both Buyers and Sellers Expect the Price of a Commodity

question 35

Multiple Choice

If both buyers and sellers expect the price of a commodity to rise in the future, it is likely that equilibrium:

• A) price will fall with little change in equilibrium quantity.
• B) price will rise with little change in equilibrium quantity.
• C) quantity will fall with little change in equilibrium price.
• D) quantity will rise with little change in equilibrium price.

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Definitions:

Shutdown Decision

A short-run economic decision made by firms about whether to continue operations or shut down temporarily based on costs and revenue.

Marginal Cost Curve

A graphical representation showing the change in the total cost of producing one additional unit of a product or service.

Average Variable Cost

The total variable costs divided by the quantity of output produced, representing the variable cost of producing each unit of output.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced, showing the average cost per unit.