Economics 8. Short-run and long-run effects of a shift in demandSuppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 75 million blocks peryear. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in tofu are linked to chronic illness.The FDA's research is expected to cause consumers to demand tofu at every price. In the short run, firms will respond byShift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the FDA's research.PRICE (Dollars per block)109B210015SupplyIn the long run, some firms will respond byDemand30 45 60 75 90 105 120 135 150QUANTITY (Millions of blocks)Demand1Supplyuntil In the long run, some firms will respond byShift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the FDA's research and the newlong-run equilibrium after firms and consumers finish adjusting to the news.PRICE (Dollars per block)210015SupplyDemand30 45 60 75 90 105 120 135 150QUANTITY (Millions of blocks)ODemand1untilSupplyThe new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry isrun.the long

8. Short-run and long-run effects of a shift in demand Suppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 75 million blocks per year. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in tofu are linked to chronic illness. The FDA's research is expected to cause consumers to demand tofu at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the FDA's research. PRICE (Dollars per block) 9 a 2 0 15 Supply In the long run, some firms will respond by, Demand 30 45 60 75 00 105 120 135 150 QUANTITY (Millions of blocks) Demand 10 Supply until

8. Short-run and long-run effects of a shift in demand Suppose that the tofu industry is initially operating in long-run equilibrium at a price level of $5 per block of tofu and quantity of 75 million blocks per year. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in tofu are linked to chronic illness. The FDA's research is expected to cause consumers to demand tofu at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the FDA's research. PRICE (Dollars per block) 9 a 2 0 15 Supply In the long run, some firms will respond by, Demand 30 45 60 75 00 105 120 135 150 QUANTITY (Millions of blocks) Demand 10 Supply until

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter2: Using Economics To Study Health Issues

Section: Chapter Questions

Problem 1QAP

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