Question

According to the nightly news, several buyers have noticed that gasoline prices are expected to decrease by 35 cents per gallon next week. What might happen in the market for             gasoline today, and why? Draw a supply and demand diagram. Also, write WHY the curve (or curves) is (are) shifting based on the shift factors for demand and supply.  What is happening to the equilibrium price and quantity? Remember the concept of ceteris paribus.  

Answer 1

An expected decrease in price is likely to shift the Demand curve to the left today, as many people may want to postpone their consumption of Diesel to the coming week. This in itself should bring the prices and the quantity of Diesel supplied down today itself to P2 and Q2.
Note that this drop in demand is temporary, as the demand is likely to increase back to D1 or even increase further next week

The curve shifts left because the Expectations of the consumers about the market change.

Hope this helps. Let me know in case of any queries.

Hence, the effect of the price decrease may be felt today itself!

This is what happens in the real world, as the information gets