**8. Short-run and long-run effects of a shift in demand**Suppose that the chicken industry is in long-run equilibrium at a price of $5 per pound of chicken and a quantity of 50 million pounds per year. Suppose that WebMD claims that a protein found in chicken will increase your expected lifespan by 3 years.WebMD’s claim will cause consumers to demand more ▼ chicken at every price. In the short run, firms will respond by __________________________________________ ▼. ### Understanding Supply and Demand ShiftsThe graph you see illustrates the short-run effects related to supply and demand. The goal is to understand how these curves can shift in response to external claims, such as those made by WebMD.**Graph Explanation:**- **Axes:** - The horizontal axis represents Quantity (Millions of pounds). - The vertical axis represents Price (Dollars per pound).- **Curves:** - The **Supply** curve is shown in orange, sloping upwards from left to right, indicating that as the price increases, the quantity supplied increases. - The initial **Demand** curve, labeled as $D_1$, is shown in blue. It slopes downwards, indicating that as the price decreases, the quantity demanded increases. - The shifted **Demand** curve, labeled as $D_2$, is also shown in blue. It represents a change in demand due to an external factor.- **Equilibrium:** - The initial equilibrium is indicated by the intersection of the supply curve and the initial demand curve $D_1$. - The black dashed lines at the new equilibrium show price and quantity adjustments as the demand curve shifts to $D_2$.**Short-run versus Long-run Adjustments:**- In the **short run**, market adjustments may occur due to sudden changes in demand, such as those influenced by external claims impacting consumer behavior.- In the **long run**, some firms may respond by: - **Exiting the industry** if they can’t compete with changes. - Adjusting output as **chicken populations grow large enough to support more firms**.This graph exemplifies basic economic principles of supply and demand, emphasizing how external factors can lead to shifts and market responses over time.

A) More Producing more chicken and earning positive economic profit The demand will rises because…

Suppose that WebMD claims that a protein found in chicken will increase your expected lifespan by 3 years. WebMD's claim vwill cause consumers to demand more chicken at every price. In the short run, firms will respond by

Suppose that WebMD claims that a protein found in chicken will increase your expected lifespan by 3 years. WebMD's claim vwill cause consumers to demand more chicken at every price. In the short run, firms will respond by

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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