An Expectation That the Price of a Good Will Increase

question 84

Multiple Choice

An expectation that the price of a good will increase in the future is likely to:

• A) increase current demand.
• B) decrease current demand.
• C) have no impact on current demand.
• D) only affect the seller's decisions.

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Definitions:

Federal Excise Tax

A tax imposed by the federal government on the sale of certain goods and services, such as gasoline, alcohol, and tobacco.

Efficiency Loss

The loss of economic efficiency that can occur when the balance between supply and demand is not achieved or when market conditions lead to a misallocation of resources.

Marginal Benefit

The additional satisfaction or utility gained by consuming or producing one more unit of a good or service.

Marginal Cost

The increase in cost that results from producing one additional unit of a good or service.