Question

7. 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 400 million pounds per year. Suppose that WebMD claims that a protein found in shrimp will increase your expected lifespan by 2 years. 

WebMD's claim 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 WebMD's claim. 

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 WebMD's claim 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 _______  in the long run.

Answer 1

consumer demand to increase run, hioms will respond by ... In the short increasing forice, quantity supplied. O 100 > In the long run, some firms will responde by increasing supply until competitive price is (entering the market) reached LRS' 07 nowe is vertical Long oun supply (inelestic) .