7. Short-run and long-run effects of a shift in demand

Suppose that the perfectly competitive tuna industry is in long-run equilibrium at a price of $3 per can of tuna and a quantity of 600 million cans per year. Suppose the Surgeon General issues a report saying that eating tuna is bad for your health.

A) he Surgeon General's report will cause consumers to demand (Less OR More) tuna at every price. In the short run, firms will respond by (Producing less tuna and running at a loss, producing the same amount and earning positive profit, entering the industry, reducing more and earing positive profit, producing same amount of tuna and running at the loss OR exiting the industry).

B

? 8 O Supply 5 Demand O 4 Supply 3 PRICE (Dollars per can) Demand 2 0 200 400 600 800 1000 1200 QUANTITY (Millions of cans)O Supply Demand O 4 Supply 3 PRICE (Dollars per can) Demand 2 0 200 400 600 800 1000 1200 QUANTITY (Millions of cans)