The accompanying graphs represent the market for soybeans, a perfectly (purely) competitive market, and Roy's Soys, an individual firm in the market for soybeans. The market and the firm are currently in long-run equilibrium at point A. 1. Show what happens in the short run on both graphs when a new medical study shows soybeans to be highly carcinogenic. On the market graph, you will shift a curve or curves. On the firm's graph, use Price 2 to draw a new price line for the firm. On both graphs, indicate the new equilibrium point with point B. 2. Now, show the changes that get both graphs back to long-run equilibrium. Use shift(s) for the market and Price 3 for the firm. Indicate the new long-run equilibrium with point Soybean market 20 B 20 Price 2 B Roy's Soys Price 3 19 . Short-run supply 19 Marginal cost 18 18 17 17 16 10 16 15 15 14 14 13 13 12 12 Price ($) ค. 11 11 10 A Long-run supply 810 Average total cost Price 9 8 7 6 5 5 8 7 7 b 5 5 4 3 4 3 3 2 Demand 2 1 1 0 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity (millions of bushels) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity (hundreds of bushels)

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Chapter1: Making Economics Decisions
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The accompanying graphs represent the market for soybeans, a perfectly (purely) competitive market, and
Roy's Soys, an individual firm in the market for soybeans. The market and the firm are currently in long-run
equilibrium at point A.
1. Show what happens in the short run on both graphs when a new medical study shows soybeans to be
highly carcinogenic. On the market graph, you will shift a curve or curves. On the firm's graph, use Price 2
to draw a new price line for the firm. On both graphs, indicate the new equilibrium point with point B.
2. Now, show the changes that get both graphs back to long-run equilibrium. Use shift(s) for the market and
Price 3 for the firm. Indicate the new long-run equilibrium with point
Soybean market
20
20
B
C
Price 2
19
•
Short-run supply
19
B
•
Roy's Soys
Price 3
Marginal cost
18
18
17
17
17
16
16
16
15
15
15
14
14
14
14
13
13
19
12
12
12
12
11
11
10
A
Long-run supply
10
A
Average total cost
Price
9
9
8
7
7
6
5
2
1
0
Demand
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quantity (millions of bushels)
5
4
3
2
2
1
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Quantity (hundreds of bushels)
Transcribed Image Text:The accompanying graphs represent the market for soybeans, a perfectly (purely) competitive market, and Roy's Soys, an individual firm in the market for soybeans. The market and the firm are currently in long-run equilibrium at point A. 1. Show what happens in the short run on both graphs when a new medical study shows soybeans to be highly carcinogenic. On the market graph, you will shift a curve or curves. On the firm's graph, use Price 2 to draw a new price line for the firm. On both graphs, indicate the new equilibrium point with point B. 2. Now, show the changes that get both graphs back to long-run equilibrium. Use shift(s) for the market and Price 3 for the firm. Indicate the new long-run equilibrium with point Soybean market 20 20 B C Price 2 19 • Short-run supply 19 B • Roy's Soys Price 3 Marginal cost 18 18 17 17 17 16 16 16 15 15 15 14 14 14 14 13 13 19 12 12 12 12 11 11 10 A Long-run supply 10 A Average total cost Price 9 9 8 7 7 6 5 2 1 0 Demand 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity (millions of bushels) 5 4 3 2 2 1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity (hundreds of bushels)
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