Question

An infestation of banana spiders makes it extremely difficult to harvest Indian bananas. The U.S. Surgeon General has stated that there are numerous health benefits from eating bananas. As a result, one should expect:

Answer 1

Answer:

Correct answer is (B) Equilibrium price to rise, but equilibrium quantity to be indeterminate from the information given.

Explanation:

Due to the numerous health benefits from eating bananas as stated by the U.S. Surgeon, there will be an increase in demand for banana which will make the demand curve to shift to the right making the equilibrium price to rise. For the supply curve, it will be noted that information given does not really stated whether the supply of banana increases or decreases, hence, the quality is indeterminate.