run. PRICE (Dollars per pound) Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 200 million pounds per year. Suppose the Surgeon General issues a report saying that eating shrimp is bad for your health. The Surgeon General's report will cause consumers to demand shrimp at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of the Surgeon General's report. PRICE (Dollars per pound) 1 2 7 10 9 Supply Demand Demand 0 80 120 160 200 240 280 320 360 400 QUANTITY (Millions of pounds) In the long run, some firms will respond by Supply until Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of the Surgeon General's report and the new long-run equilibrium after firms and consumers finish adjusting to the news. 1 2 10 9 Supply Demand 8 7 Demand 0 0 80 120 160 200 240 280 320 360 400 QUANTITY (Millions of pounds) Supply The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long
run. PRICE (Dollars per pound) Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 200 million pounds per year. Suppose the Surgeon General issues a report saying that eating shrimp is bad for your health. The Surgeon General's report will cause consumers to demand shrimp at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of the Surgeon General's report. PRICE (Dollars per pound) 1 2 7 10 9 Supply Demand Demand 0 80 120 160 200 240 280 320 360 400 QUANTITY (Millions of pounds) In the long run, some firms will respond by Supply until Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of the Surgeon General's report and the new long-run equilibrium after firms and consumers finish adjusting to the news. 1 2 10 9 Supply Demand 8 7 Demand 0 0 80 120 160 200 240 280 320 360 400 QUANTITY (Millions of pounds) Supply The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long
Chapter6: Elasticities
Section: Chapter Questions
Problem 19P
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Transcribed Image Text:run.
PRICE (Dollars per pound)
Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 200 million pounds per year.
Suppose the Surgeon General issues a report saying that eating shrimp is bad for your health.
The Surgeon General's report will cause consumers to demand
shrimp at every price. In the short run, firms will respond by
Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of the Surgeon General's report.
PRICE (Dollars per pound)
1
2
7
10
9
Supply
Demand
Demand
0
80
120 160 200 240 280 320 360 400
QUANTITY (Millions of pounds)
In the long run, some firms will respond by
Supply
until
Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of the Surgeon General's report
and the new long-run equilibrium after firms and consumers finish adjusting to the news.
1
2
10
9
Supply
Demand
8
7
Demand
0
0
80
120 160 200 240 280 320 360 400
QUANTITY (Millions of pounds)
Supply
The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is
in the long
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