The European Union (EU) has put a tariff system in place on imports of bananas from Latin America. The rationale behind this tariff system is that the imports of cheap bananas may damage domestic consumption of fresh fruits produced in the EU.

a. Is the European legislator assuming that fresh fruit and bananas are substitutes or complements? Briefly explain.

b. If a tariff on bananas acts as an increase in the cost of supplying bananas in the EU, use two demand and supply graphs to show the effects of the introduction of the tariff system. One graph should show the effect on the banana market in the EU, and the other graph should show the effect on the fresh fruit market in the EU. Be sure to label the change in equilibrium price and quantity in each market and any shifts in the demand and supply curves.