7 Situation Lumber producers expect the price of lumber to d

7. Situation: Lumber producers expect the price of lumber to decrease in the not too distant future, c.p. What does this affect? Again, keep in mind we are talking about how much lumber will be taken to market today (the market supply) as a result of this situation. Supply Quantity Supplied Lumber P 3 2 20 40 60 80 100 Quantity

Solution

An expectation that the price will decrease in the future will decrease the demand in present i.e. people will postpone the demand and they will wait for the price to decrease. It will lead to a shift in the demand curve and lesser quantity will be supplied at a lower price.

It will affect the quantity supplied (not the supply of the lumber.) These will be no change in the supply curve it will remain where it is. The movement will be along the supply curve.