Question

Today, producers changed their expectations about the future. This change a. can affect future supply, but not today's supply. b. can cause a movement along the supply curve. c. can affect today's supply. d. cannot affect either today's supply or future supply.

Answer 1

Answer:

c. can affect today's supply.

Explanation:

Supply in the quantity of a commodity a producer is willing and able to sell in the market at a particular price during a specified period of time.

There are many factors which determines the willing and ability of the producers to sell and which therefore affect supply of a commodity in the market. Some of these factors include: prices of related goods, price of inputs, advancement in technology, number of suppliers, expectations of producers.

Expectations of producers as regards the future price of a product today can affect today's supply of the product.

For example, if today's expectations of a producer is that the price of his product will rise in the future, he will reduce today's supply of the good and store it in order to sell it a higher price in the future. Conversely, If today's expectations of the producer is that the price of his product will fall in the future, he will increase today's supply of the good in order to sell it and make a profit before the price fall.

Therefore, a today's change in producers expectations about the future can affect today's supply.