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6. 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 250 million pounds per year. Suppose that WebMD claims that a protein found in shrimp will increase your expected life span by 5 years. WebMD's claim will cause consumers to demand Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of WebMD's claim. Supply 8 7 6 5 * Demand 2 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Millions of pounds) PRICE (Dollars per pound) 10 9 1 PRICE (Dollars per pound) 0 In the long run, some firms will respond by 10 ▼ shrimp at every price. In the short run, firms will respond by 9 Supply 7 6 X Demand 0 50 100 150 200 250 300 350 350 400 450 500 QUANTITY (Millions of pounds) Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of WebMD's claim and the new long-run equilibrium after firms and consumers finish adjusting to the news. 2 1 Demand 0 Supply (?) Demand 0- Supply until (?) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long

6. 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 250 million pounds per year. Suppose that WebMD claims that a protein found in shrimp will increase your expected life span by 5 years. WebMD's claim will cause consumers to demand Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of WebMD's claim. Supply 8 7 6 5 * Demand 2 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Millions of pounds) PRICE (Dollars per pound) 10 9 1 PRICE (Dollars per pound) 0 In the long run, some firms will respond by 10 ▼ shrimp at every price. In the short run, firms will respond by 9 Supply 7 6 X Demand 0 50 100 150 200 250 300 350 350 400 450 500 QUANTITY (Millions of pounds) Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of WebMD's claim and the new long-run equilibrium after firms and consumers finish adjusting to the news. 2 1 Demand 0 Supply (?) Demand 0- Supply until (?) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long

ECON MICRO
ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 3.6P: (Price Elasticity of Supply) Calculate the price elasticity of supply for each of the following...
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6. 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 250 million pounds per year. Suppose that WebMD claims that a protein found in shrimp will increase your expected life span by 5 years. WebMD's claim will cause consumers to demand Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of WebMD's claim. Supply 8 7 6 5 * Demand 2 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Millions of pounds) PRICE (Dollars per pound) 10 9 1 PRICE (Dollars per pound) 0 In the long run, some firms will respond by 10 ▼ shrimp at every price. In the short run, firms will respond by 9 Supply 7 6 X Demand 0 50 100 150 200 250 300 350 350 400 450 500 QUANTITY (Millions of pounds) Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of WebMD's claim and the new long-run equilibrium after firms and consumers finish adjusting to the news. 2 1 Demand 0 Supply (?) Demand 0- Supply until (?) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long
Transcribed Image Text:6. 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 250 million pounds per year. Suppose that WebMD claims that a protein found in shrimp will increase your expected life span by 5 years. WebMD's claim will cause consumers to demand Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of WebMD's claim. Supply 8 7 6 5 * Demand 2 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Millions of pounds) PRICE (Dollars per pound) 10 9 1 PRICE (Dollars per pound) 0 In the long run, some firms will respond by 10 ▼ shrimp at every price. In the short run, firms will respond by 9 Supply 7 6 X Demand 0 50 100 150 200 250 300 350 350 400 450 500 QUANTITY (Millions of pounds) Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of WebMD's claim and the new long-run equilibrium after firms and consumers finish adjusting to the news. 2 1 Demand 0 Supply (?) Demand 0- Supply until (?) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long
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