Can you explain how a change in consumers' expectations of future prices might shift the demand curve, and provide a real-world example?

Consumers' expectations of future prices can influence current demand. If consumers expect prices to rise in the future, they might buy more of the product now, shifting the current demand curve to the right. Conversely, if they expect prices to fall, they might buy less now, shifting the demand curve to the left. A real-world example could be the housing market: if people expect house prices to rise rapidly, they might buy houses sooner, increasing current demand and possibly driving up prices in the short term.

Answered by: David YEconomics Tutor
2.8Kviews
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