An increase in the demand for bananas will cause the equilibrium price of bananas to rise, ceteris paribus.

Question

Quizplus · Accepted Answer

When there is an increase in demand for bananas, the demand curve will shift to the right. This causes a shortage in the market, as the quantity demanded now exceeds the quantity supplied. To clear the market, producers will increase the price of bananas until the new equilibrium point is reached, where the quantity demanded equals the quantity supplied at a higher price than before.

An Increase in the Demand for Bananas Will Cause the Equilibrium