Question

8. Short-run and long-run effects of a shift in demand Aa Aa Suppose that the chicken industry is in long-run equilibrium at a price of $3 per pound of chicken and a quantity of 600 million pounds per year. Suppose the Surgeon General issues a report saying that eating chicken is good 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 Shift the supply curve, the demand curve, or both on the following diagram to illustrate these short-run effects of the Surgeon General's announcement. Tool tip: Click and drag one or both of the curves. Curves will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little farther. PRICE (Dollars per pound) 6 Supply 5 4 + 3 1 1 2 + 1 Domand

Answer 1

Consumers to demand MORE chicken .

In the short run firms will respond by producing more chicken and earning positive profits.

Reason- So in the short run Demand curve shifts to the right.

S P PA D A.

In the long run firms will respond by entering the industry until each firm in the industry is once again earning zero profit.

Reason- In the long run Supply curve will shift to the right.

Supply Price Newysupply ES New Demand Demand Quantity