9. The long-run supply curve in different cost industries Aa Aa Consider the market for milk, which is a perfectly competitive market. Suppose that tastes shift toward milk so that the market demand curve shifts rightward. Answer the following questions about the effect of this change in tastes assuming external economies are present. The following graph shows the market for annual milk consumption. Initially, the market is in a long-run equilibrium at point B. After the change in tastes and the rightward shift in demand, the market moves to point D in the short run. In the long run, the supply curve shifts from S1 to S2, which causes the market to move to point A in the long run. PRICE (Dollars per gallon) 10 5 2 0 B с D D1 A S1 S2 D2 2 8 10 QUANTITY (Thousands of gallons per year] Long-Run Supply Help Clear All

9. The long-run supply curve in different cost industries Aa Aa Consider the market for milk, which is a perfectly competitive market. Suppose that tastes shift toward milk so that the market demand curve shifts rightward. Answer the following questions about the effect of this change in tastes assuming external economies are present. The following graph shows the market for annual milk consumption. Initially, the market is in a long-run equilibrium at point B. After the change in tastes and the rightward shift in demand, the market moves to point D in the short run. In the long run, the supply curve shifts from S1 to S2, which causes the market to move to point A in the long run. PRICE (Dollars per gallon) 10 5 2 0 B с D D1 A S1 S2 D2 2 8 10 QUANTITY (Thousands of gallons per year] Long-Run Supply Help Clear All

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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