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4. Suppose the U.S. Food and Drug Administration warns consumers to avoid bagged spinach due to an E. coli outbreak linked to the vegetable. (a)
4. Suppose the U.S. Food and Drug Administration warns consumers to avoid bagged spinach due to an E. coli outbreak linked to the vegetable. (a) Assume that the competitive spinach market was in long-run equilibrium before the E. coli out- break. In two separate graphs show (1) the pre-E. coli spinach market, and (2) the typical rm. Graphically and verbally show the short-run changes at the market and rm levels after the E. coli outbreak. (b) If consumers continue suspecting possible contamination in spinach in the long run, graphically and verbally show the resulting long-run situation at the market and rm levels. Use your diagram from part (a)
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