Answer to Question #229136 in Microeconomics for Lulu

Question

Draw diagram on to show the impact on the demand curve and the equilibrium price and quantity of sasko bread if there's an expected increase in the price of flour

Answer 1

If there's an expected increase in the price of flour, sasko bread bakers will purchase more flour at the current price. The consumers will purchase more bread now but they will not purchase too much bread to stock because bread has a very short shelf life hence the demand curve shifts rightward from D to D1.