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Question

A. This question is related to supply adjustments to an increase in demand in a market

selling

banana.

i. Draw three separate supply curves for banana representing immediate market

period, short-run and long-run. Explain why the shape of these curves are not the

same at different time horizons.

ii. Suppose that there is an increase in demand for banana. Explain the impact of this

on equilibrium price and equilibrium quantity in each of the time horizons. In

which market period does an increase in demand impose greatest impact on price?

Graphical illustration is required.

Top Answer

Hey there, The attempt... View the full answer

banana market.png

Banana Market
Immediate period
Short Term
Long Term
Price
Price
S1
Price
X
S1
S1
P1
P1
P1
D 1
D 1
Qty
Q1
Qty
Q1
Qty
Q1
Increase in the demand for Bananas at each period
Price
Price
Price
S1
S1
P2...

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