Health Canada's report will cause consumers to demand 1. (less or more) tuna at every price. In the short run, firms will respond by 2. (exiting the industry, producing the same amount of tuna and running at a loss, producing more tuna and earning positive profit, entering the industry, producing the same amount of tuna and earning positive profit, producing less tuna and running at a loss) In the long run, some firms will respond by 3. ( entering the industry, producing less tuna and earning positive profit, producing more tuna and earning positive profit, exiting the industry, producing less tuna and running at a loss, producing more tuna and running at a loss) until 4. (consumer demand returns to its original level, tuna populations grow large enough to support more firms, new technologies are discovered that lower costs, each firm in the industry is once again earning zero profit) Assuming the long-run price and quantity are as you found in the preceding problem, the tuna industry is 5. (a decreasing-cost industry, a constant-cost industry, an increasing-cost industry )
Health Canada's report will cause consumers to demand 1. (less or more) tuna at every price. In the short run, firms will respond by 2. (exiting the industry, producing the same amount of tuna and running at a loss, producing more tuna and earning positive profit, entering the industry, producing the same amount of tuna and earning positive profit, producing less tuna and running at a loss)
In the long run, some firms will respond by 3. ( entering the industry, producing less tuna and earning positive profit, producing more tuna and earning positive profit, exiting the industry, producing less tuna and running at a loss, producing more tuna and running at a loss) until 4. (consumer demand returns to its original level, tuna populations grow large enough to support more firms, new technologies are discovered that lower costs, each firm in the industry is once again earning zero profit)
Assuming the long-run price and quantity are as you found in the preceding problem, the tuna industry is 5. (a decreasing-cost industry, a constant-cost industry, an increasing-cost industry )
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