June100 0 Posted October 16, 2020 Report Share Posted October 16, 2020 Hello, everyone! I think that when a producer expects that price will fall, he would supply more now for higher profit relatively. However, my teacher said that a producer begins to supply less because producers have to plan ahead, if he produces more now, he is likely to end up with a surplus in the future. I'm sooo confused...please explain this Thank you😊 Reply Link to post Share on other sites
EconDaddy 42 Posted October 16, 2020 Report Share Posted October 16, 2020 Hi, When producers expect prices to fall, they start reducing their supply now (leftward shift of the supply curve), to avoid a surplus that they would not be able to sell at the current price. So your teacher is right. If producers expect prices to rise in the future, they start producing more now (rightward shift of the supply curve) so that in the future they can sell more at higher prices, increasing their profits. Hope this helps. Thanks, EconDaddy IB Economics teacher, examiner and tutor www.econdaddy.com Reply Link to post Share on other sites
June100 0 Posted October 25, 2020 Author Report Share Posted October 25, 2020 On 10/16/2020 at 11:10 PM, EconDaddy said: Hi, When producers expect prices to fall, they start reducing their supply now (leftward shift of the supply curve), to avoid a surplus that they would not be able to sell at the current price. So your teacher is right. If producers expect prices to rise in the future, they start producing more now (rightward shift of the supply curve) so that in the future they can sell more at higher prices, increasing their profits. Hope this helps. Thanks, EconDaddy IB Economics teacher, examiner and tutor www.econdaddy.com Thank you for your help! Reply Link to post Share on other sites
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