How did the fires in the amazon impact the production of bananas in brazil? What are...

How did the fires in the amazon impact the production of bananas in brazil? What are the implications of this on the market for bananas in Brazil?

Expert Solution

The Banana trees will be destroyed by fires. That will decrease the amount of bananas to be produced. This reduction in banana cultivation will result in a fall in banana production. This decline in banana production will cut banana supply.
Since there is no shift in demand for a good but its supply decrease then the price of the good will rise and the amount traded for the good will decrease.

And, with banana demand staying the same, this decline in banana supply would result in an rise in banana prices and a decrease in quantity.

Thus, the equilibrium price of bananas will rise and the equilibrium quantity of bananas in the bananas will decrease in Brazil.

In the below diagram it is clearly shown that due to the shift in supply towards left (S2 from S1) the equilibrium price has grown up (P2* from P1*) and the equilibrium quantity has goes down (Q2* from Q1*).

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Rahul Sunny answered 7 months ago

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