B. 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 pound of chicken and a quantity of 150 million pounds per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in chicken is causing bacterial infections to spread around the world. The CDC's announcement will cause consumers to demand 7 chicken at every price. In the short run, rms will respond by Shift the demand curve, the supply curve, or both on the 4 m Japh to illustrate these Shel-bran eiects of the CDC's announcement. The EDC's announcement will cause consumers to demand V chicken at every price. In the short run, rms will respond by V . producing more chicken and earning positive prot 'ph to illustrate there slim-bran eects of the CDC's announcement. producing the same amount of thicken and earning positive prot _ : producing the same amount of chicken and running at a loss producing less chicken and running at a loss exiting the industry entering the industry Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the CDC's announcement. 10 O Supply Demand O 7 6 Supply PRICE (Dollars per pound) 3 Demand 2 30 60 90 120 150 180 210 240 270 300 QUANTITY (Millions of pounds)In the long run, some firms will respond by until producing less chicken and earning positive profit Shift the demand curve, the supply curve, or producing less chicken and running at a loss ort-run effects of the CDC's announcement and the new long-run equilibrium after firms and con entering the industry producing more chicken and running at a loss producing more chicken and earning positive profit exiting the industry 10 9 Supply Demand 8 7 O andeach firm in the industry is once again earning zero profit g graph to illustrate both the short-run effects of the CDC's announcement and the chicken populations grow large enough to support more firms ing to the news. consumer demand returns to its original level ? new technologies are discovered that lower costs 10 -0-Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the CDC's announcement and the new long-run equilibrium after firms and consumers finish adjusting to the news. 10 O Supply Demand Supply PRICE (Dollars per pound) Demand vertical upward sloping 30 90 120 150 180 210 240 270 3 QUANTITY (Millions of pounds) downward sloping horizontal The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long run.The first two conditions imply that all consumers and firms are price takers. While the third is not necessary for price-taking behavior, assume for this problem that a market cannot maintain competition in the long run without free entry. Identify whether or not each of the following scenarios describes a competitive market, along with the correct explanation of why or why not. Scenario Competitive? In a major metropolitan area, one chain of coffee shops has gained a large market share because customers feel its coffee tastes better than that of its competitors. Dozens of companies produce plain white socks. Consumers regard plain white socks as identical and don't care who manufactures their socks. Yes, meets all assumptions No, no free entry In a small town, there are two providers of broadband Internet access: a cable company and the phone company. The Internet access offered by both providers is of the same No, not many sellers speed. No, not an identical product Scholastic Inc. owns the U.S. copyright to a popular book series. It is the only company with the legal right to publish books in the series in the United States