If suppliers anticipate a decrease in future prices, what are they likely to do?

When suppliers expect a decrease in future prices, they are likely to decrease current supply. This behavior is grounded in the suppliers' aim to maximize their profits. If they anticipate lower prices in the future, they might not benefit from selling their products at a higher current price. As a result, suppliers may choose to cut back on their current supply to avoid having excess inventory that could potentially sell for lower prices in the future.

By reducing current supply, they can also create a sense of scarcity, which might stabilize or increase current prices. This strategic adjustment helps them manage their profits in light of expected lower prices, allowing them to avoid losses associated with unsold inventory.