**5. Short-run and long-run effects of a shift in demand****Scenario:** Suppose that the perfectly competitive shrimp industry is in long-run equilibrium at a price of $3 per kilogram of shrimp and a quantity of 600 million kilograms per year. Suppose Health Canada issues a report stating that eating shrimp is bad for your health.**Impact of Health Canada's Report:**Health Canada’s report will cause consumers to demand **less** shrimp at every price. In the short run, firms will respond by **reducing** the quantity of shrimp supplied.**Instructions:**Shift the supply curve, the demand curve, or both on the following diagram to illustrate these short-run effects of Health Canada's announcement.**Note:** Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.**Graph Description:**- The y-axis represents the Price (dollars per kilogram).- The x-axis represents Quantity (millions of kilograms of shrimp).- The initial equilibrium is where the original Demand (D1) curve intersects with the original Supply (S1) curve, indicating a price of $3 per kilogram and a quantity of 600 million kilograms.**Graph Area:**- **Demand (D1)** curve: Slopes downward from left to right, indicating that as prices rise, the quantity demanded decreases.- **Supply (S1)** curve: Slopes upward from left to right, indicating that as prices rise, the quantity supplied increases.- After Health Canada's announcement, the Demand curve should be shifted to the left to show a decrease in demand.- The new equilibrium should show a lower quantity of shrimp sold and a lower price if the demand curve shifts significantly.By manipulating these curves, users can visually understand the market impacts of decreased demand due to health concerns, especially focusing on the short-run adjustments in the shrimp market. **Educational Website Content**---### Title: Analysis of Market Dynamics#### Text:In the long run, some firms will respond by _______ until _______.**Graph Description:**Shift the supply curve, the demand curve, or both on the following diagram to illustrate both the short-run effects of Health Canada's announcement and the new long-run equilibrium after firms and consumers finish adjusting to Health Canada's announcement.**Diagram Analysis:**The graph provided is a standard supply and demand chart with the X-axis representing quantity (in millions of kilograms) and the Y-axis representing price (in dollars per kilogram). The initial equilibrium point is where the demand and supply curves intersect.- **Supply Curve**: Depicted in orange.- **Demand Curve**: Depicted in blue.There are two additional curves labeled demand and supply, likely representing shifts in response to Health Canada's announcement, though they are not explicitly detailed in the graph:- **Shifted Demand Curve**: Dashed blue.- **Shifted Supply Curve**: Dashed black.**Detailed Steps to Illustrate Shifts:**1. Identify how Health Canada's announcement impacts consumer behavior and industry production costs.2. Show the short-run effect by shifting the relevant curve (either demand or supply or both).3. Determine the new short-run equilibrium price and quantity.4. Analyze the long-run adjustments made by firms and consumers.5. Adjust the curves again to represent the new long-run equilibrium.---Assuming the long-run price and quantity are as you found in the preceding problem, the shrimp industry is _______.---This content provides an understanding of how policy announcements can affect market dynamics and gives step-by-step instructions to analyze these effects using graphical representations of supply and demand.

An individual’s willingness to pay for each unit of the quantity he or she wishes to consume is…

5. Short-run and long-run effects of a shift in demand Suppose that the perfectly competitive shrimp industry is in long-run equilibrium at a price of $3 per kilogram of shrimp and a quantity of 600 million kilograms per year. Suppose Health Canada issues a report saying that eating shrimp is bad for your health. shrimp at every price. In the short run, firms will respond by Health Canada's report will cause consumers to demand Shift the supply curve, the demand curve, or both on the following diagram to illustrate these short-run effects of Health Canada's announcement. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dolars per kilogram) Supply Demand 10 Demand 10 Supply

5. Short-run and long-run effects of a shift in demand Suppose that the perfectly competitive shrimp industry is in long-run equilibrium at a price of $3 per kilogram of shrimp and a quantity of 600 million kilograms per year. Suppose Health Canada issues a report saying that eating shrimp is bad for your health. shrimp at every price. In the short run, firms will respond by Health Canada's report will cause consumers to demand Shift the supply curve, the demand curve, or both on the following diagram to illustrate these short-run effects of Health Canada's announcement. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dolars per kilogram) Supply Demand 10 Demand 10 Supply

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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