Question

Macroeconomics

Jhons and others expect that there will be a sale at her foreign film store next week. Draw a graph labeling both axis of the demand and supply curves with the change that occurs.

Answer 1

In the given case, consumer are expecting a change in price next week.

When consumer expects a decrease in price in future time period then they reduce their demand in current time period.

On the other hand, when consumer expects an increase in price in future time period then they increase their demand in current time period.

Jhons and other are expecting that there will be sale at the foreign film store next week.

This means they are expecting a decrease in price next week.

So, they will decrease their demand for foreign films in current week.

When demand decreases there is leftward shift of the demand curve.

Following is the required graph -