Aggregate Demand and Supply Question

resources, increase, factors

For the factors that shift SR agg supply,
why is it that if owners of resources expect future prices to rise (inflation) , they would have an incentive to withhold their resources from the market and the SRAS shifts to the left, and if future prices to fall (deflation), they would have an incentive to sell immediately, shifting SRAS to right..
Why I am confused is that, if future prices will rise, wouldn’t resource owners want to increase SUPPLY now, before it gets too expensive to supply it in the future?

For example, when there is an unanticipated upward shift in aggregate demand, this increase the PRICE LEVEL and the SR SRAS shifts to the LEFT because PRODUCTION COSTS become too EXPENSIVE…
I hate economics

. Reading 42: Market-Based Valuation: Price and Enterprise Val

. Reading 43: Market-Based Valuation: Price Multiples- LOS

. Reading 56: An Introduction to Security Valuation- LOS d～

. Reading 25: U.S. Inflation, Unemployment, and Business Cycl

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发表于 2013-4-4 02:58 | 只看该作者

Hellomello
I think that it might help to decouple the concept of how much something costs to produce and the price that you can sell it at.
You said
Why I am confused is that, if future prices will rise, wouldn’t resource owners want to increase SUPPLY now, before it gets too expensive to supply it in the future?
If the future price is going to rise because of increased demand, vice an increased cost to produce the supplier has an incentive to withhold sales and make the price rise quicker to realise his gains (assuming he can affect the market in this way), or hold onto his reserves and sell later.

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