In microeconomics, how do consumers' expectations about a product's future price affect the current demand curve for that product (all else equal)?

• A. Expectations about future prices shift the supply curve rather than the demand curve.
• B. Expectations about future prices change the quantity demanded but do not shift the demand curve.
• C. If consumers expect the price to rise in the future, current demand decreases (the demand curve shifts left).
• D. If consumers expect the price to rise in the future, current demand increases (the demand curve shifts right).

Answer: (D)

Verified step by step guidance

1. Understand the concept of the demand curve: it shows the relationship between the price of a product and the quantity demanded, holding all else constant.
2. Recognize that consumers' expectations about future prices influence their current purchasing decisions because they anticipate how prices will change over time.
3. If consumers expect the price of a product to rise in the future, they are more likely to buy more of the product now to avoid paying a higher price later, which increases current demand.
4. An increase in current demand due to expected future price increases causes the entire demand curve to shift to the right, indicating higher quantity demanded at every current price.
5. Conversely, if consumers expect prices to fall in the future, they may delay purchases, decreasing current demand and shifting the demand curve to the left.