Question

8. Short-run and long-run effects of a shift in demand Suppose that the chicken industry is in long-run equilibrium at a price of $5 per pound of chicken and a quantity of 350 million pounds per year. Suppose the Surgeon General issues a report saying that eating chicken is bad for your health. The Surgeon General's report will cause consumers to demand chicken at every price. In the short run, firms will respond by producing more chicken and earning positive profit taph to illustrate these short-run effects of the Surgeon General's report. exiting the industry producing the same amount of chicken and earning positive profit entering the industry producing less chicken and running at a loss o producing the same amount of chicken and running at a loss Demand Supply PRICE (Dollars per pound)

small blank is "more" or "less"

Answer 1

Blanks-

1) less

2) producing less chicken and running at a loss

Supply Demand Supply PRICE (Dollars per pound) Demand 0 70 630 700 140 210 280 350 420 490 560 QUANTITY (Millions of pounds)

3) exiting the industry

4) each firm in the industry is once again earning zero profit

5) horizontal

Supply Demand Supply PRICE (Dollars per pound) Demand 0 70 630 700 140 210 280 350 420 490 560 QUANTITY (Millions of pounds)