(SEE PHOTOS)Suppose that the perfectly competitive chicken industry is in long-run equilibrium at a price of $3 per kilogram of chicken and a quantity of 600 million kilograms per year. Suppose Health Canada issues a report saying that eating chicken is bad for your health.Health Canada's report will cause consumers to demand (LESS/MORE) chicken at every price. In the short run, firms will respond by producing less chicken and running at a lossexiting the industryentering the industryproducing the same amount of chicken and running at a lossproducing the same amount of chicken and earning positive profitproducing more chicken and earning positive profitIn the long run, some firms will respond by exiting the industryproducing less chicken and running at a lossproducing less chicken and earning positive profitentering the industryproducing more chicken and running at a lossproducing more chicken and earning positive profituntilnew technologies are discovered that lower costschicken populations grow large enough to support more firmsconsumer demand returns to its original leveleach firm in the industry is once again earning zero profitAssuming the long-run price and quantity are as you found in the preceding problem, the chicken industry is a decreasing-cost industrya constant-cost industryan increasing-cost industry Suppose that the perfectly competitive chicken industry is in long-run equilibrium at a price of $3 per kilogram of chicken and a quantity of 600 millionkilograms per year. Suppose Health Canada issues a report saying that eating chicken is bad for your health.less/moreHealth Canada's report will cause consumers to demandchicken at every price. In the short run, firms will respond byproducing less chicken and running at a lossagram to illustrate these short-run effects of Health Canada's announcement.exiting the industryon. Curves will snap into position, so if you try to move a curve and it snaps backentering the industryproducing the same amount of chicken and running at a loss(?producing the same amount of chicken and earning positive profitproducing more chicken and earning positive profitSupplyDemandSupplyDemand20040060080010001200QUANTITY (Millions of kilograms)In the long run, some firms will respond byuntilexiting the industrynew technologies are discovered that lower costsproducing less chicken and running at a losschicken populations grow large enough tomore firmsproducing less chicken and earning positive profitconsumer demand returns to its original levelentering the industryeach firm in the industry is once again earning zero profitproducing more chicken and running at a lossproducing more chicken and earning positive profitPRICE (Dollars per kilogram) Shift the supply curve, the demand curve, or both on the following diagram to illustrate both the short-run effects of Health Canada's announcementand the new long-run equilibrium after firms and consumers finish adjusting to Health Canada's announcement.(?SupplyDemandSupplyDemanda decreasing-cost industry20040060080010001200QUANTITY (Millions of kilograms)a constant-cost industryan increasing-cost industryAssuming the long-run price and quantity are as you found in the preceding problem, the chicken industry isPRICE (Dollars per kilogram)

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Answered: Suppose that the perfectly competitive…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(SEE PHOTOS)

Suppose that the perfectly competitive chicken industry is in long-run equilibrium at a price of $3 per kilogram of chicken and a quantity of 600 million kilograms per year. Suppose Health Canada issues a report saying that eating chicken is bad for your health.

Health Canada's report will cause consumers to demand (LESS/MORE) chicken at every price. In the short run, firms will respond by

producing less chicken and running at a loss
exiting the industry
entering the industry
producing the same amount of chicken and running at a loss
producing the same amount of chicken and earning positive profit
producing more chicken and earning positive profit

In the long run, some firms will respond by

exiting the industry
producing less chicken and running at a loss
producing less chicken and earning positive profit
entering the industry
producing more chicken and running at a loss
producing more chicken and earning positive profit

until

new technologies are discovered that lower costs
chicken populations grow large enough to support more firms
consumer demand returns to its original level
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 chicken industry is

a decreasing-cost industry
a constant-cost industry
an increasing-cost industry

Suppose that the perfectly competitive chicken industry is in long-run equilibrium at a price of $3 per kilogram of chicken and a quantity of 600 million
kilograms per year. Suppose Health Canada issues a report saying that eating chicken is bad for your health.
less/more
Health Canada's report will cause consumers to demand
chicken at every price. In the short run, firms will respond by
producing less chicken and running at a loss
agram to illustrate these short-run effects of Health Canada's announcement.
exiting the industry
on. Curves will snap into position, so if you try to move a curve and it snaps back
entering the industry
producing the same amount of chicken and running at a loss
(?
producing the same amount of chicken and earning positive profit
producing more chicken and earning positive profit
Supply
Demand
Supply
Demand
200
400
600
800
1000
1200
QUANTITY (Millions of kilograms)
In the long run, some firms will respond by
until
exiting the industry
new technologies are discovered that lower costs
producing less chicken and running at a loss
chicken populations grow large enough to
more firms
producing less chicken and earning positive profit
consumer demand returns to its original level
entering the industry
each firm in the industry is once again earning zero profit
producing more chicken and running at a loss
producing more chicken and earning positive profit
PRICE (Dollars per kilogram)

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.
(?
Supply
Demand
Supply
Demand
a decreasing-cost industry
200
400
600
800
1000
1200
QUANTITY (Millions of kilograms)
a constant-cost industry
an increasing-cost industry
Assuming the long-run price and quantity are as you found in the preceding problem, the chicken industry is
PRICE (Dollars per kilogram)

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