Bananas are selling briskly at local stores, and supply is easy to maintain. A nationwide ad campaign emphasizes the health benefits of bananas causing demand to shift to D2. How might store owners respond, and how would it affect the equilibrium price?

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Yosef Mclaughlin

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18 April, 15:55

Bananas are selling briskly at local stores, and supply is easy to maintain. A nationwide ad campaign emphasizes the health benefits of bananas causing demand to shift to D2. How might store owners respond, and how would it affect the equilibrium price?

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Lucas Harmon · Answer 1

What would happen would be that the store owners would wan't to increase their supplies of bananas so they would buy in bulk. Since it would sell due to increased demand, they wouldn't have anything to fear. This would cause the equilibrium price to slowly rise and it would stop rising once the interest in bananas was lost and switched to something else.