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.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 C. The accompanying graphs represent the market for soybeans, a perfectly (purely) competitive market, and Roy's Soys, anindividual firm in the market for soybeans. The market and the firm are currently in long-run equilibrium at point A.Soybean marketRoy's Soys2020Price 2Price 3C• Marginal cost191918Short-run supply18171716161515141413131212* 11O 11Average total cost10A10ALong-run supplyPrice5433Demand0123 4 56789 10 11 12 13 14 15 16 17 18 19 20Quantity (millions of bushels)0123 4 5678910 11 12 13 14 15 16 17 18 19 20Quantity (hundreds of bushels)1. Show what happens in the short run on both graphs when a new medical study shows soybeans to be highlycarcinogenic. On the market graph, you will shift a curve or curves. On the firm's graph, use Price 2 to draw a new priceline 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 thefirm. Indicate the new long-run equilibrium with point C.

In a perfect competition market, individual firms supply their goods at prices that are determined…

Answered: The accompanying graphs represent the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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.
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 C.

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.
Soybean market
Roy's Soys
20
20
Price 2
Price 3
C
• Marginal cost
19
19
18
Short-run supply
18
17
17
16
16
15
15
14
14
13
13
12
12
* 11
O 11
Average total cost
10
A
10
A
Long-run supply
Price
5
4
3
3
Demand
0123 4 56789 10 11 12 13 14 15 16 17 18 19 20
Quantity (millions of bushels)
0123 4 5678910 11 12 13 14 15 16 17 18 19 20
Quantity (hundreds of bushels)
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 C.

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