Final answer:
Expectation of higher future prices leads to increased current demand, as consumers stock up while prices are lower. This behaviour applies to all markets, not just rice. Other factors such as weather also influence these decisions.
Step-by-step explanation:
If buyers are expecting higher prices for rice in the near future, the current demand for rice will probably increase. This is because buyers would want to take advantage of current lower prices and stock up before costs go up. This concept mirrors what happens in other market scenarios as well.
For example, suppose a farmer sees that the price of oats has risen. The higher price could be due to an increase in demand caused by a new scientific study proclaiming that eating oats is healthy or a rise in the price of a substitute grain, like corn. Anticipating higher future prices, consumers would start buying more oats now, thereby increasing the current demand. The farmer, in this case, would find it profitable to expand production as a result.
However, it's important to note that decisions are also influenced by other factors. Poor weather or sudden changes in weather and climate that affect agricultural production can cause sharp rise in prices, thus affecting market behaviour along with price expectations.
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