Scenario 14-5
A study sponsored by the Food Consumer Safety Board found that consumption of irradiated tomatoes increased the health of laboratory rats. As a result of national press coverage of the report, the demand for irradiated tomatoes increased dramatically. Organic farmers were able to switch from organic production of tomatoes to irradiated production with no additional cost. Assume that the tomato market satisfies all of the assumptions of perfect competition.
-Refer to Scenario 14-5. As a result of the increase in the demand for tomatoes, we would predict that in the short run that the

Question

Quizplus · Accepted Answer

An increase in demand for tomatoes will lead to an increase in price in the short run in a perfectly competitive market, as the supply curve is relatively fixed in the short run. This will allow existing producers to earn profits. However, in the long run, the increase in profits will attract new firms to enter the market, causing the supply curve to shift rightward, and the price to return to its original level.

Scenario 14-5 A Study Sponsored by the Food Consumer Safety Board Found