AP Macroeconomics Question 98: Answer and Explanation

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Question: 98

12. Suppose consumers expect the price of corn to be lower in the near future while the price of seed corn and fertilizer fall. What will happen to the equilibrium price and the equilibrium quantity?

  • A. The equilibrium price will rise while the equilibrium quantity is indeterminate.
  • B. The equilibrium price will fall while the equilibrium quantity is indeterminate.
  • C. The equilibrium price is indeterminate while the equilibrium quantity will rise.
  • D. The equilibrium price is indeterminate while the equilibrium quantity will fall.
  • E. There is not enough information to answer definitely.

Correct Answer: B

Explanation:

(B)