Question

explain why in a market situation high cost producers are unlikely to produce the goods or...

explain why in a market situation high cost producers are unlikely to produce the goods or services in a market and why low benefit consumers are unlikely to get lettuce

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Answer #1

Answer : In a market high production cost raise the price level which decrease the maket demand for the product or service, according to the demand law. If demand decrease then producer reduce their production to maximize profit in the short run time period but in long run time period producers either exit from the market or do not be ready to produce.

On the other hand, consumers always try to maximize their utilities. In this case if consumers gets low benefit from lettuce consumption and lettus has market substitutes which gives maximum benefits then consumers go to buy substitute goods which decrease the demand for lettuce. Hence consumers do not want to get lettuce.

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