Question
A farmer who is producing organic apples currently earns positive economic prots when the market price of an apple is $ 1.50. Consumers are willing
A farmer who is producing organic apples currently earns positive economic prots when the market price of an apple is $ 1.50. Consumers are willing to buy more organic apples after a research shows that organic apples help to reduce the risk of diabetes. At the same time, this research result gives farmers incentives to produce and supply more organic apples. As the result, the price rises. What happens to the farmer's prot-maximizing level of output if the price of the apple rises? Use two graphs (one for the market and the other for the rm) to explain your answer.
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