Question

Suppose that the shrimp industry is in long-run equilibrium at a price of per pound of shrimp and a quantity of 50 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 short run, firms will respond by _______ until  _______ .

Shirt the demand curve, the supply curve, or both on the following graph to Mlustrate both the short run effects of WebMD's claim and the new long run equilibrium after Arms 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

1. More

2. By increasing their production of shrimps.

In the short run, the demand curve of shrimps will shift rightwards to D'D' and this leads to increase in equilibrium price and equilibrium quantity of shrimps.This can be depicted as:

Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 50 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 s hrimp 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. Demand Supply PRICE Dollars per pound) 0 10 20 100 30 40 50 60 70 80 QUANTITY (Millions of pounds) until in the long run, some firms will respond by

In the long run, firms will respond by

3. Entering in the shrimp industry as new firms will enter the industry because of supernormal profits earned by existing firms.

4. Until Price falls to the initial equilibrium price.

Shirt the demand curve, the supply curve, or both on the following graph to Mlustrate both the short run effects of WebMD's claim and the new long run equwbrium after Arms and consumers finish adjusting to the news. 0 Demand 0 Supply PRICE (Dollars per pound) 0 10 20 30 40 50 QUANTITY (Milions of pounds) 100 The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is run. in the long

Horizontal or straight line parallel to X Axis