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Analyzing Price and Non-Price factors

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Illustrate each of the following events using a demand and supply diagram for bananas

-Reports surface that imported bananas are infected with a deadly virus.

-Consumers incomes drop.

-The price of bananas rises.

-The price of oranges falls.

-Consumers expect the price of bananas to decrease in the future.

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Solution Summary

Solution describes the effect of given situations on demand and supply of bananas with the help of suitable graphs.

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Please refer attached file for complete solution. Graphs are missing here.


Reports surface that imported bananas are infected with a deadly virus.

I assume that there is no way out to distinguish between an imported banana and a domestically grown banana.Such reports will make the consumers' to switch over to other products because of the health concerns. So, demand for bananas will fall. New equilibrium price and quantity will be lower than earlier. Fall is equilibrium quantity and prices will be quite ...

Solution provided by:
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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