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Suppose that the market for cantaloupes is currently in long-run equilibrium at a price of $3 per melon. A listeria outbreak in cantaloupe crops leads
Suppose that the market for cantaloupes is currently in long-run equilibrium at a price of $3 per melon. A listeria outbreak in cantaloupe crops leads to a sharp decline in the demand for cantaloupes. a. In the short-run, what will happen to the price of a cantaloupe? Explain and use a graph to illustrate your answer. b. In the short-run, how will firms respond to the change in the price described in part (a)? What will happen to each producer's profits in the short run? Explain your answer using a graph. c. Given the situation described in (b), what can we expect to happen to the number of producers in the cantaloupe industry in the long-run? Why? d. What will the long run equilibrium price of a cantaloupe be? Show your solution in a graph
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