Assume that the market for cage-free eggs is perfectly competitive.All else equal, as more farmers choose to produce and sell cage-free eggs, what is likely to happen to the equilibrium price of the eggs and profits of these farmers in the long run?

Question

Quizplus · Accepted Answer

As more farmers choose to produce and sell cage-free eggs, the supply of cage-free eggs will increase, shifting the supply curve to the right. This will cause the equilibrium price to decrease. Additionally, the increased competition among farmers will likely lead to lower profits, as they will have to lower their prices to stay competitive. Therefore, the equilibrium price is likely to decrease and profits are likely to decrease in the long run.

Assume That the Market for Cage-Free Eggs Is Perfectly Competitive