Scenario 13-5
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 13-5.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

The increase in demand for irradiated tomatoes is likely to increase the market price of tomatoes in the short run due to the fixed supply of tomatoes. In the short run, firms cannot increase their supply to meet the new market demand. As a result, the market price of tomatoes would increase, but the production of tomatoes would not necessarily be at efficient scale since firms cannot expand their production in the short run. The total cost for existing irradiated tomato producers might remain the same or even decrease due to economies of scale associated with increased production, and there is no reason to predict that the number of firms in the market would fall as prices rise.

Scenario 13-5 A Study Sponsored by the Food Consumer Safety Board Found