Scientists have developed a bacterium that they believe will lower the freezing

Question

Scientists have developed a bacterium that they believe will lower the freezing point of tomatoes. This innovation could save farmers $1 billion a year in crops lost to frost damage. If this technology becomes widely used, what will happen to the equilibrium price and quantity for the tomato market?

a. price will decrease, quantity will decrease

b. price will decrease, quantity will increase

c. price will increase, quantity will decrease

d. price will increase, quantity will increase

e. The change in equilibrium price and quantity is indeterminate

Explanation / Answer

Scientists have developed a bacterium that they believe will lower the freezing point of tomatoes. This innovation could save farmers $1 billion a year in crops lost to frost damage.This increases supply of tomatoes in market because damage has been reduced.

So supply curve of tomatoes shifts right.So quantity supplied will be greater than quantity demanded at exiting price.Hence, price decreases and quantity rises.

So correct option is b.

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