What are price expectations?

Price expectations are what people think something will cost before they buy it.

Imagine you're going to a candy store with your friend. You both want a big chocolate bar. But you've seen the price tag on that chocolate bar before, maybe it was $2 last time. So, you expect it to be around $2 again this time. That's price expectation, it’s like a guess about how much something will cost.

Sometimes the guess is right, the candy bar is still $2. But sometimes the store has a sale, and it goes down to $1! Now your friend was surprised because they expected $2, but got $1 instead. That's like when you think your favorite toy will be expensive, but then you find it on sale for less.

Or maybe the candy bar went up to $3, now you’re surprised in a different way. Your guess didn’t match what happened. But that’s okay! People use their price expectations to decide if they want to buy something or not.