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

PART 1

Suppose that the chicken industry is in long-run equilibrium at a price of $5 per kilogram of chicken and a quantity of 300 million kilograms per year. Suppose that WebMD claims that the bacteria found in chicken will decrease your expected life span by 3 years. ( question, continued in pic)

WebMD's claim will cause consumers to demand V chicken at every price. In the short run, firms will respond by v WebMD's claim will cause consumers to demand v chicken at every price. In the short run, firms will respond by producing less chicken and running at a loss producing the same amount of chicken and running at a loss Y h on the following diagram to illustrate these short-run effects of WebMD's producing more chicken and earning positive profit entering the industry producing the same amount of chicken and earning positive profit exiting the industry 0 Attempts Keep the Highest / 5 8. Short-run and long-run effects of a shift in demand Suppose that the chicken industry is in long-run equilibrium at a price of $5 per kilogram of chicken and a quantity of 300 million kilograms per year. Suppose that WebMD claims that the bacteria found in chicken will decrease your expected life span by 3 years. WebMD's claim will cause consumers to demand chicken at every price. In the short run, firms will respond by less On the graph below, shift the demand curve, the more curve, or both on the following diagram to illustrate these short-run effects of WebMD's claim. 10 O 9 Supply Demand 8 710 O 9 Supply Demand 8 0 7 6 Supply 5 PRICE (Dollars per kilogram) 4 3 Demand 2 0 60 120 180 240 300 360 420 480 540 600 QUANTITY (Millions of kilograms) In the long run, some firms will respond by untilSupply Demand 8 Supply PRICE (Dollars per kilogram) A 3 Demand N 0 60 120 180 240 300 360 420 480 540 600 QUANTITY (Millions of kilograms) In the long run, some firms will respond by producing less chicken and earning positive profit On the graph below, shift the demand curve, producing more chicken and earning positive profit illustrate claim and the new long-run equilibrium after producing more chicken and running at a loss entering the industry exiting the industry producing less chicken and running at a loss 10Aplia Homework: Chapter 14 10 O CO Supply Demand 6 Supply PRICE (Dollars per kilogram) A w Demand N - 0 60 120 180 240 300 360 420 480 540 600 QUANTITY (Millions of kilograms) In the long run, some firms will respond by until each firm in the industry is once again earning zero profit both on the following diagram to illustrate both the short-run effects of WebMD's new technologies are discovered that lower costs 's finish adjusting to the news. chicken populations grow large enough to support more firms consumer demand returns to its original levelOn the graph below, shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of WebMD's claim and the new long-run equilibrium after firms and consumers finish adjusting to the news. 10 O CO Supply Demand Supply PRICE (Dollars per kilogram) A w Demand N 60 120 180 240 300 360 420 480 5 600 QUANTITY (Millions of kilograms) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long run