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:

Management's Expectations

The forecasts or outlooks on future business performance, operational results, or financial conditions as projected by a company's management.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of maximization of shareholder wealth.

Capital Markets

Financial markets for buying and selling equity and debt instruments, which channel savings and investment between suppliers of capital and users of capital.

Large Sums

Large sums typically refer to a significantly high amount of money in various financial contexts, including investments, transactions, or savings.