Question

in the united states, most of the bananas found in stores are from central and south america. one year, these banana crops are badly damaged by insects. which statement best describes the most likely effect of the damage on the price of bananas in the united states? a. the price of bananas will go up and down. b. the price of bananas will increase. c. the price of bananas will stay the same. d. the price of bananas will drop.

Explanation:

When banana crops are damaged by insects, the supply of bananas decreases (since less bananas are available from the main source). According to the basic economic principle of supply and demand, if supply decreases while demand (assuming demand for bananas in the US remains relatively stable) stays the same or doesn't decrease proportionally, the price of bananas will tend to increase. Option A is incorrect as there's no reason for it to fluctuate randomly. Option C is incorrect because a supply shock (crop damage) will impact price. Option D is incorrect because less supply would not lead to a price drop; it would likely increase.

Answer:

B. The price of bananas will increase.