When the market price of bananas increases, banana farmers will, on average, choose to:
Question
When the market price of bananas increases, banana farmers will, on average, choose to:
Solution
When the market price of bananas increases, banana farmers will, on average, choose to produce and sell more bananas. This behavior is driven by the concept of the law of supply, which states that as the price of a good rises, the quantity supplied of that good also tends to rise, assuming all other factors remain constant.
Higher prices create a greater incentive for farmers to allocate resources towards banana production because the potential for increased revenue makes production more attractive. Farmers may invest in expanding their fields, improving their cultivation methods, or increasing labor to boost their output. Consequently, the supply of bananas in the market may also increase, which could eventually influence market prices in the future, depending on overall demand and other market dynamics.
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