If both wheat buyers and sellers anticipate a future rise in wheat prices, what effect is expected on the current market equilibrium price and quantity of wheat?

Show Answers

Both price and quantity effects are uncertain.Price will fall, while the quantity effect remains unclear.Price will rise, but quantity will decline.Price is expected to increase, but the change in quantity is uncertain.Both price and quantity will increase.

Explanation

When both buyers and sellers expect wheat prices to increase, sellers may hold back supply to sell later at higher prices, reducing current supply, while buyers may increase demand to purchase before prices rise. These opposing forces cause the equilibrium price to rise, but the net effect on quantity is uncertain.