Question

8. 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 300 million pounds per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in shrimp is causing bacterial infections to spread around the world. The CDC’s announcement 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 diagram to illustrate these short-run effects of the CDC’s announcement.  In the long run, some firms will respond by _______  until _______ .  Shift the demand curve, the supply curve, or both on the following diagram to illustrate both the short-run effects of the CDC's announcement 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