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Expectations of higher future prices cause firms to lower prices today to sell their product before prices rise? True or false
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- Explain the statement. Whether true or false. Consumer future expectations plays an significant role in determining the price of a good or service.If crude oil prices rise significantly, then heating oil prices will most likely: Decrease Increase Stay the sameOther things the same, when the price level rises more than expected, some firms will have higher than desired prices which increases their sales. higher than desired prices which depresses their sales. lower than desired prices which increases their sales. lower than desired prices which depresses their sales.
- what is your prediction about future softwood lumber prices and subsequent home prices for next year?Assume that the housing market is in equilibrium in year 1. In year 2, the mortgage rate that banks charge consumers increases, but producers are not affected. Which of the following is most likely to be the equilibrium change? a The equilibrium will be at point C before the change in expectations and point A after the change b The equilibrium will be at point A before the change in expectations and point B after the change c The equilibrium will be at point A before the change in expectations and point C after the change d The equilibrium will be at point E before the change in expectations and point C after the changeOther things the same, when the price level rises more than expected, some firms will have a. higher than desired prices, which increases their sales. b. higher than desired prices, which depresses their sales. c. lower than desired prices, which increases their sales. d. lower than desired prices, which depresses their sales.
- In an efficient market, investors can consistently make high returns since it is easier to estimate price movements. True or False?Consumers expect an increase in the future price of a good, then neither demand nor supply will shift. current demand will increase (shift rightward). current demand will decrease (shift leftward). current supply will increase (shift rightward).Compare and contrastadaptive expectations and rationalexpectations.
- Explain with reasons whether you expect the price of oil in 2050 to be higher, lower, or stable compared to its present value.Assume that the housing market is in equilibrium in year 1. In year 2, the mortgage rate that banks charge consumers decreases, but producers are not affected. Also in year 2, the cost of lumber used to build homes decreases. Which of the following is most likely to be the equilibrium change? a The equilibrium will be at point C before the change in expectations and point B after the change b The equilibrium will be at point A before the change in expectations and point B after the change c The equilibrium will be at point A before the change in expectations and point E after the change d The equilibrium will be at point E before the change in expectations and point A after the changeWhat happens when firms and workers underestimate future prices in the economy? Explain the answer while focusing on what would happen to actual output as opposed to the expected potential output.