8. Short-run and long-run effects of a shift in demand Suppose that the tuna industry is...

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8. Short-run and long-run effects of a shift in demand Suppose that the tuna industry is in long-run equilibrium at a price of $5 per can of tuna and a quantity of 350 million cans per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in tuna helps prevent many viral infections from spreading. The CDC's announcement will cause consumers to demand tuna at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of the CDC's announcement. 10 9. Supply Demand 8 7 Supply 4 Demand 1 70 140 210 280 350 420 490 560 630 700 QUANTITY (Millions of cans) PRICE (Dollars per can) 3. In the long run, some firms will respond by until Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of the CDC's announcement and the new long-run equilibrium after firms and consumers finish adjusting to the news. 10 9. Supply Demand 8 7 Supply 3 Demand 1 70 140 210 280 350 420 490 560 630 700 QUANTITY (Millions of cans) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long run. PRICE (Dollars per can) 4- Blanks: 1. more or less 2. entering the industry producing less tuna and running at a loss producing the same amount of tuna and earning positive profit producing more tuna and earning positive profit exiting the industry producing the same amount of tuna and running at a loss 3. In the long run, some firms will respond by until exiting the industry Shift the demand curve, the supply curve, or producing less tuna and earning positive profit and the new long-run equilibrium after firms e short-run ei producing more tuna and running at a loss producing more tuna and earning positive profit entering the industry producing less tuna and running at a loss 10 A 4. tuna populations grow large enough to support more firms wing diagram i consumer demand returns to its original level inish adjusting each firm in the industry is once again earning zero profit new technologies are discovered that lower costs upward sloping vertical horizontal downward sloping is in the long run. 5. 8. Short-run and long-run effects of a shift in demand Suppose that the tuna industry is in long-run equilibrium at a price of $5 per can of tuna and a quantity of 350 million cans per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in tuna helps prevent many viral infections from spreading. The CDC's announcement will cause consumers to demand tuna at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of the CDC's announcement. 10 9. Supply Demand 8 7 Supply 4 Demand 1 70 140 210 280 350 420 490 560 630 700 QUANTITY (Millions of cans) PRICE (Dollars per can) 3. In the long run, some firms will respond by until Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of the CDC's announcement and the new long-run equilibrium after firms and consumers finish adjusting to the news. 10 9. Supply Demand 8 7 Supply 3 Demand 1 70 140 210 280 350 420 490 560 630 700 QUANTITY (Millions of cans) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long run. PRICE (Dollars per can) 4- Blanks: 1. more or less 2. entering the industry producing less tuna and running at a loss producing the same amount of tuna and earning positive profit producing more tuna and earning positive profit exiting the industry producing the same amount of tuna and running at a loss 3. In the long run, some firms will respond by until exiting the industry Shift the demand curve, the supply curve, or producing less tuna and earning positive profit and the new long-run equilibrium after firms e short-run ei producing more tuna and running at a loss producing more tuna and earning positive profit entering the industry producing less tuna and running at a loss 10 A 4. tuna populations grow large enough to support more firms wing diagram i consumer demand returns to its original level inish adjusting each firm in the industry is once again earning zero profit new technologies are discovered that lower costs upward sloping vertical horizontal downward sloping is in the long run. 5.