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

Question

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 500 milion 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 firms will respond by shrimp at every price. In the short run, Shift the demand curve, the supply curve, or both on the following graph to iRustrate these short-run effects of the Surgeon Generai's report 10 Demand Supply 100200 "400 500 600 TCO BOO 900 1000 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 sRustrate 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

Explanation / Answer

1. The surgeon general report will cause consumers to demand less shrimps at every price.

2. In short run the firm will continue to produce output until marginal revenue (MR) is equal to marginal cost (MC).

3. In long run some of the firms will decrease there output (Production), in order to sustain.

4. Is Elastic in the long run.

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