8. Short-run and long-run effects of a shift in demand Suppose that the shrimp industry Is in long-run equilibrium at a price of $5 per kilogram of shrimp and a quantity of 450 million kilograms per year. Suppose that the Public Health Agency of Canada (PHAC) announces that a chemical found in shrimp is causing bacterial Infections to spread around the world. The PHAC's announcement will cause consumers to demand - . shrimp at every price. In the short run, firms will respond by producing the same amount of shrimp and running at a loss. the on the following diagram to Illustrate these short-run effects of the PHAC's producing less shrimp and running at a loss producing more shrimp and earning positive profit producing the same amount of shrimp and earning positive profit exiting the industry entering the Industry Supply Demand Supply PRICE (Dollars per kilogram) Demand 40 180 370 360 480 640 830 720 10 900 QUANTITY M onschoolOn the graph below, shift the demand curve, the supply curve, or both on the following diagram to Illustrate these short-run effects of the PHAC's announcement O- Supply Demand Supply PRICE (Dollars per kilogram) 10 150 270 300 450 540 830 720 810 809 QUANTITY (Millions of kilograms) In the long run, some firms will respond by untilAssignment 4 - Part 2 of 4 - Chapter 14 Questions 3 Demand 90 180 270 360 450 540 630 720 810 DO0 QUANTITY (Millions of kilograms) In the long run, some firms will respond by until producing less shrimp and running at a loss On the graph below, shift the demand curve, producing less shrimp and earning positive profit ilustrate both the short-run effects of th announcement and the new long-run equilib exiting the industry news. producing more shrimp and earning positive profit entering the Industry producing more shrimp and running at a loss Supply Demand Supply PRICE (Dollars per kilogram) DemandPRI Demand IN 90 180 270 360 450 540 630 720 810 900 QUANTITY (Millions of kilograms) In the long run, some firms will respond by until new technologies are discovered that lower costs both on the following diagram to illustrate both the short-run effects of the PHAC consumer demand returns to its original level consumers finish adjusting to the news. shrimp populations grow large enough to support more firms each firm in the industry is once again earning zero profit 2 Supply Demand Supply PRICE (Dollars per kilogram) DemandOn the graph below, shift the demand curve, the supply curve, or both on the following diagram to Mustrate both the short-run effects of the PHAC's announcement and the new long-run equilibrium after firms and consumers finish adjusting to the news. Supply Demand Supply PRICE (Dollars per kilogram) Demand vertical downward sloping 180 270 360 459 540 830 720 810 800 QUANTITY (Millions of kilograms) horizontal upward sloping The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long run