Suppose the competitive market for the red potatoes is in long-run equilibrium at a price of $12 per bag. Then new scientific research links red potato consumption with a reduced risk of unhappiness. For the questions below, assume you move from the equilibrium before the discovery to a new equilibrium after the announcement of the discovery. For each question below explain your answer using a completely labeled diagram.

a.In the short run, what will happen to the price of red potatoes? Explain and illustrate using a completely labeled diagram.

b.In the short run, how will firms respond to the change in price described in part a? What will happen to profits? Explain and illustrate using the same diagram.

c.Given the situation described in part b, what can we expect to happen to the number of red potato producers in the long run? Explain and illustrate this on a graph.