Please help! I will rate! Please answer the graphs and blanks. The graph\'s line
ID: 1150372 • Letter: P
Question
Please help! I will rate!Please answer the graphs and blanks. The graph's lines shift from either side. The blanks will be numbered in order pertaining to the choices listed...
Blank 1- less/more
Blank 2- entering the industry/producing more turkey and earning positive profit/producing the same amount of turkey and earning positive profit/producing less turkey and running at a loss/producing the same amount of turkey and running at a loss/exiting the industry
Blank 3-producing more turkey and running at a lost/producing less turkey and earning positive profit/ exiting the industry/producing more turkey and earning positive profit/entering the industry/producing less turkey and running at a loss
Blank 4- New technologies are discovered that lower costs/ each firm in the industry is once again earning zero profit/turkey populations grow large enough to support firms/consumer demand returns to its original level
Blank 5-vertical/upward slope/downward slope/horizontal 8. Short-run and long-run effects of a shift in demand Suppose that the turkey industry is in long-run equilibrium at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. Suppose that WebMD claims that a protein found in turkey will increase your expected life span by 5 years. WebMD's claim will cause consumers to demand turkey at every price. In the short run, firms will respond by
Explanation / Answer
The equilibrium price will be 5 and quantity is 50.
WebMD’s claim will cause consumers to demand more turkey at every price. In the short run, firms will respond by producing more turkey and earning positive profit.
In long run because of the increase in life span by consuming more turkey, the demand goes up in a unchanged supply. It will lead to more demand, so demand will be more. More demand leads to increase in the price and output.
In short run it will lead to get more economic profits. Hence, in the short run existing firms will produce more turkey and earn positive profit.
In the long run, some firms will respond by producing more turkey and earning positive profit until each firm in the industry is once again earning zero profit.
In the long run new firms will enter into the market to get more economic profits. But one new firms enters the demand will be adjusted with the supply. This will lead to fall in the price until all the firms gets again normal profits.
The new equilibrium price and quantity suggest that the shape of long run supply curve in this industry is vertical (assuming constant cost industry) in the long run.