Question

For the first question and blank the options are less or more!

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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. 10 Suppl Demand 65 Supply 頜 upward sloping downward slopingNTITY (Millions of pounds) 40 50 60 70 80 90100 horizontal vertical price and quantity suggest that the shape of the long-run supply curve in this industry is ▼ in the long run.

Answer 1

The news is positive so that demand for shrimps will increase. Consumer demand more shrimps at every price. In short run, firms respond by producing more and earning positive economic profits.

In the long run, some firms will respond by entering the industry until each firm in the industry once again zero economic profits.

Since long run supply curve is flat, it is horizontal in the long run.

10 Suppl S1 D1 Demand 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Millions of pounds)