Suppose that the tuna industry is in long-run equilibrium at a price of $5 per c

Question

Suppose that the tuna industry is in long-run equilibrium at a price of $5 per can of tuna and a quantity of 400 million cans per year. Suppose the Surgeon General issues a report saying that eating tuna is bad for your health. The Surgeon General's report 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 Surgeon General's report. Shift the demand curve, the supply curve, or both on the following diagram 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. The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is

Explanation / Answer

Answer to blank 1: Less

Answer to blank 2: producing less tuna and running at a loss

Answer to blank 3:exiting the tuna industry

Answer to blank 4: each firm in the industry is once again earning zero profit

Answer to blank 5: a constant-cost industry

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