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.If the increased production of irradiated tomatoes caused a rise in the marginal transportation costs of moving irradiated tomatoes to market,the

Question

Quizplus · Accepted Answer

If the marginal transportation costs increase, some of the firms may exit the market in the long run since they are unable to cover their costs. As a result, the market supply of irradiated tomatoes decreases, leading to an upward sloping long-run market supply curve. This is because as the price increases, new firms will enter the market, but this will be limited by the available resources, so the supply cannot increase indefinitely. Therefore, the long-run market supply of irradiated tomatoes would be upward sloping.

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