Question

1. A California biotechnology firm submitted a tomato that will not rot for weeks to the U.S. Food and Drug Administration. It designed such fruit by changing the genetic structure of the tomato. What effect will this technological change have on:
   • The price of tomatoes?
   • Farmers, who grow tomatoes?
   • The geographic areas where tomatoes are grown?
   • Where tomatoes are generally placed on salad bars in winter?
2. When you buy a cheap computer printer, you can sometimes get it for free after the rebate. Why would a firm sell you something for a zero price? (The answer isn't that it wants to be nice.)

Answer 1

The genetically modified tomato will not rot for several weeks.

Thus the price of tomatoes will reduce as once produced, it will last for several weeks and the supply will increase, which will lead to reduction in price of tomatoes as there will be ample tomatoes available for consumption.

Number of farmers growing tomatoes would reduce as it is not generating huge amounts of profits because of increase in supply and durability of the product. Thus number of farmers growing tomatoes would reduce or stay the same in light of increased supply.

Geographical areas where tomatoes are grown would reduce or stay the same as once they are produced, they last for several weeks, thus new areas don't need to be developed for production because of increased supply. However because of genetic modification, the tomato could degrade the quality of soil in the geographical area as it could be consuming too much water or nutrients, thus the total area might reduce for production because of decline in soil quality.

Tomatoes would be placed on salad bars in winter on a greater scale as they don't rot fast and keep the salad fresh and healthy. They would be placed in other seasons as well as the durability is more.

When one buys a cheap computer printer, one can sometimes get it for free after the rebate. The firm would sell something for a zero price because it could benefit the firm by way of marketing wherein the product was not getting sold and by giving a rebate, indirectly marketing increases as more number of consumers than come in to buy the product at a full price because of the visibility. It might also be that the firm wants to get rid of the product and incurs cost because of limited space availability and wants to get rid of the product. Thus by giving a rebate, it is able to sell the product and bring in other expensive products which are best selling.