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Producer Expectations

Consumers' buying decisions are bases on their expectations of future income. Also suppliers make current production decisions on their expected future income. But, producers' income depends on the prices they can charge for their products.

Amanda Kelly

on 22 April 2010

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Transcript of Producer Expectations

Producer Expectations A historical example of producer expectations are the Carnegie Railroads. At six cents a mile, a ride didn't come cheap. The train went down the rails at around thirty miles per hour. In Pennsylvania, there was a rail that went from Philidelphia to Pittsburg, instead of switching rails, like other tracks. This was an increase in supply.


When people decide to increase production/sales today, they are increasing the current supply for your product because of what they EXPECT to happen in the future. A contemporary example of increase and decrease in supply is if your firm produces mp3 players and you hear that Apple will soon introduce a new iPod that has more memory and longer battery life, you (and other producers) may decide to hurry up and sell your players to stores before the new iPod comes out.

http://www.econport.org/content/handbook/supply/changeSupply.html Carnegie Railroads were becoming a popular way to travel until other railroads that went faster and were cheaper took over which caused a decrese in supply.
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