Unformatted text preview: in the future, then ............. Expectations of Future Prices (2) Supply decreases now , because sellers wait to sell at higher prices. Demand increases now , because buyers stock up before prices rise. => The price rises now. In this way: Current prices move to reflect expected future prices. Long Run Effects • LR curves are usually more elastic than SR curves. • All SR and LR curves intersect initially. • SR equilibrium occurs where (SR) D and S intersect. • LR equilibrium occurs where LRD and LRS intersect. Rules for analyzing problems in which Demand or Supply is different in the LR:...
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- Spring '07
- Supply And Demand, future prices, long run effects