Question 8
Theory of DemandOne of the reasons for an exceptional demand curve is the
- A.expectation of a future change in price
- B.availability of credit facilities
- C.change in the price of the commodity
- D.availability of substitutes
Show the answer and explanation
Answer: A (expectation of a future change in price)
Explanation
If people expect prices to rise further, they buy more now even though the price has risen, giving an upward-sloping (exceptional) demand curve.