Question

Suppose that the turkey industry is in long-run equilibrium at a price of $5 per pound of turkey and a quantity of 250 million pounds per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in turkey helps prevent many viral infections from spreading. The CDC's announcement will cause consumers to demand turkey at every price. In the short run, firms will respond by less more Shift the demand curve, the supply curve, or both on the id graph to illustrate these short-run effects of the CDC's announcement 10 9 Supply Demand 8 O Supply ICE (Dollars per pound)

Answer 1

Since turkey is beneficial, more turkey will be demanded at every price. The demand curve will shift to the right as there is a change in the tastes and preferences of consumers. The equilibrium price and quantity will increase.

In the short run, firms will respond by producing more and earning positive economic profits as P > ATC.

The positive economic profits will attract new firms in the long run. So firms will enter the competitive industry till the firms in the industry make zero economic profits.

Long run supply curve is horizontal.

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