Suppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 225 million blocks per year. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in tofu are linked to chronic illness. The FDA's research is expected to cause consumers to demand the short run, firms will respond by tofu at every price. In Shift the demand curve, the supply curve, or both on the following graph to illustrate these short- run effects of the FDA's research. PRICE (Dollars per block) 0 Supply Demand Demand 45 90 135 180 225 270 315 360 405 450 QUANTITY (Millions of blocks) In the long run, some firms will respond by Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the FDA's research and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per block) Supply Demand Demand 45 90 135 180 225 270 315 360 405 450 QUANTITY (Millions of blocks) }]} Supply

Suppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 225 million blocks per year. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in tofu are linked to chronic illness. The FDA's research is expected to cause consumers to demand the short run, firms will respond by tofu at every price. In Shift the demand curve, the supply curve, or both on the following graph to illustrate these short- run effects of the FDA's research. PRICE (Dollars per block) 0 Supply Demand Demand 45 90 135 180 225 270 315 360 405 450 QUANTITY (Millions of blocks) In the long run, some firms will respond by Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the FDA's research and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per block) Supply Demand Demand 45 90 135 180 225 270 315 360 405 450 QUANTITY (Millions of blocks) }]} Supply

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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