Assume the market for organic produce sold at farmers' markets is perfectly competitive. All else equal, as more farmers choose to produce and sell organic produce at farmers' markets, what is likely to happen to the equilibrium price of the produce and profits of the organic farmers in the long run?

Question

Quizplus · Accepted Answer

As more farmers choose to produce and sell organic produce, the supply of organic produce in the market will increase, causing the supply curve to shift to the right. As a result, the equilibrium price of organic produce will decrease. With lower prices, the profits of organic farmers are likely to decrease as well, as they will have to sell their produce at a lower price. This is because in a perfectly competitive market, each farm is a price taker and cannot influence the market price. Therefore, Choice C is the best choice.

Assume the Market for Organic Produce Sold at Farmers' Markets