The Zeppo country flour has a perfect substitute, flour grown in Harpo Country, or any other location for that matter. Farmers in Zeppo County face a perfectly elastic demand for their good. If they try to raise their prices above the market price, demand falls to zero. Even if they are trying to raise prices for a good cause - to buy a new engine for the local fire truck. Perhaps you are thinking that Zeppo Country flour is organically grown.
Organic foods represent a different market than non-organically grown foods.
In the organic market, each firm would also have a perfectly elastic demand curve for the good in question and could charge no more than the market price for that organic good. Make sure you understand the concept of a perfectly elastic good since it will be important later in the course. Perfectly elastic goods have substitutes that are identical in characteristics and so consumers will buy the lowest priced item. As a result, all producers can only charge the market price for that good. The other extreme is a good with a vertical demand curve and is perfectly inelastic .