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

  

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8. Short-run and long-run effects of a shift in demand Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 200 million pounds per year. Suppose the Surgeon General issues a report saying that eating shrimp is bad for your health. The Surgeon General's report will cause consumers to demand shrimp at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the Surgeon General's report. 10 Supply Demand 8 7 Supply 3 Demand 1 40 80 120 180 200 240 280 320 360 400 QUANTITY (Millions of pounds) In the long run, some firms will respond by until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the Surgeon General's report and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per pound) 10 Supply Demand 7 Supply 3 Demand 1 0 40 80 120 180 200 240 280 320 360 400 QUANTITY (Millions of pounds) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long run. co 2. PRICE (Dollars per pound) 8. Short-run and long-run effects of a shift in demand Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 200 million pounds per year. Suppose the Surgeon General issues a report saying that eating shrimp is bad for your health. The Surgeon General's report will cause consumers to demand shrimp at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the Surgeon General's report. 10 Supply Demand 8 7 Supply 3 Demand 1 40 80 120 180 200 240 280 320 360 400 QUANTITY (Millions of pounds) In the long run, some firms will respond by until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the Surgeon General's report and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per pound) 10 Supply Demand 7 Supply 3 Demand 1 0 40 80 120 180 200 240 280 320 360 400 QUANTITY (Millions of pounds) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long run. co 2. PRICE (Dollars per pound)

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