Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 300 million pounds per year.Suppose that the Centers for Disease Control (CDC) announces that a chemical found in shrimp is causing bacterial infections to spread around theworld.shrimp at every price. In the short run, firms will respond byThe CDC's announcement will cause consumers to demandShift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the CDC's announcement.10SupplyDemandSupply5Demand2160120180240300360420480540600QUANTITY (Millions of pounds)In the long run, some firms will respond byuntilPRICE (Dollars per pound) Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the CDC's announcement and thenew long-run equilibrium after firms and consumers finish adjusting to the news.10SupplyDemandSupplyDemand2160120180240300360420480540600QUANTITY (Millions of pounds)The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry isin the longrun.PRICE (Dollars per pound)

Given; Equilibrium price of shrimp= $5 Equilibrium quantity of shrimp= 300 million pound Centre of diseases controls announced that a chemical found in shrimp is causing bacterial infections to spread around the world.The CDC's announcement will cause consumers to demand less shrimp at every price. In the short-run, firm will respond by producing less shrimp and running at a loss. Explanation:- Due to announcement of CDC, consumer will purchase less shrimp. This will decrease the demand for shrimp in the market. Due to decrease in demand, firms will produce less shrimp in the market and running at a loss. In long-run, some firms will exit the industry until each firm earns only normal profit and zero economic profit. Explanation:- As the demand in the market decreases, price for shrimp will also decrease. Therefore, firms will choose to exit the market because the price is less then average cost. New equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is horizontal in the long-run.

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Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 300 million pounds per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in shrimp is causing bacterial infections to spread aroundt world. The COC's announcement 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 graph to illustrate these short-run effects of the CDC's announcement. 10 Supply Demand Supply Demand 60 120 180 240 300 360 420 540 600 QUANTITY (Millions of pounds) In the long run, some firms will respond by until 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 300 million pounds per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in shrimp is causing bacterial infections to spread aroundt world. The COC's announcement 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 graph to illustrate these short-run effects of the CDC's announcement. 10 Supply Demand Supply Demand 60 120 180 240 300 360 420 540 600 QUANTITY (Millions of pounds) In the long run, some firms will respond by until PRICE (Dollars per pound)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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