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Bananas, muffins, and coffee not only make a good breakfast, but also good topics for economics exams! Bananas are an input for many muffins, and
Bananas, muffins, and coffee not only make a good breakfast, but also good topics for economics exams! Bananas are an input for many muffins, and are mostly supplied to the US market as an imported product. 1. On a piece of paper, draw a correctly labeled graph of the market for bananas indicating the equilibrium price and quantity, labeled Po and Qo, respectively. (1 point) 2. In the space below, describe two different possible causes (other than a price control) for a decrease in the price of bananas, one of which would impact the supply curve and one which would impact the demand curve, and describe the impact of each cause on the supply and demand curves. (2 points) 3. On the graph drawn in part 1, show the impact of an increase in the price of muffins on the banana market; labeling the new equilibrium price and quantity P1 and Q1, respectively. (1 point) 4. Explain how the impact of the increase in the price of muffins would impact the demand for labor in the banana market. You should draw a graph to help with your explanation (2 points)
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