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31 August, 06:08

If automobile producers expect prices of automobiles to increase in the near future, what happens to supply today?

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  1. 31 August, 08:14
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    It will increase

    Explanation:

    This is due to the "law of supply". It says that whenever the prices increase, the supply will increase, because if the prices are higher, they can win more money as they sell their goods (cars in this case) and this encourages the supply to produce more and place more quantity into the market.

    In other words, just follow one of the basic laws in economics, the law of supply, which says "whenever the prices rise, the quantity supplied will also rise, ceteris paribus". By the way, ceteris paribus is latin for "all other things equal" and it means that all other factors remain unchanged (the same).
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