PRICE (Dollars per block) PRICE (Dollars per block) 2 Suppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 25 million blocks per year. Suppose a top medical journal publishes research that animal-alternative protein sources such as tofu could increase your expected lifespan by 4 years. The publication is expected to cause consumers to demand tofu 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 publication. Supply Demand Demand 05 10 15 20 25 30 35 40 45 50 QUANTITY (Millions of blocks) In the long run, some firms will respond by Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the publication and the new long- run equilibrium after firms and consumers finish adjusting to the news. 10 Supply X 05 10 15 20 25 30 35 QUANTITY (Millions of blocks) Demand 40 45 50 Demand Supply The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long
PRICE (Dollars per block) PRICE (Dollars per block) 2 Suppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 25 million blocks per year. Suppose a top medical journal publishes research that animal-alternative protein sources such as tofu could increase your expected lifespan by 4 years. The publication is expected to cause consumers to demand tofu 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 publication. Supply Demand Demand 05 10 15 20 25 30 35 40 45 50 QUANTITY (Millions of blocks) In the long run, some firms will respond by Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the publication and the new long- run equilibrium after firms and consumers finish adjusting to the news. 10 Supply X 05 10 15 20 25 30 35 QUANTITY (Millions of blocks) Demand 40 45 50 Demand Supply The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.11P
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