8. Short-run and long-run effects of a shift in demandSuppose that the chicken industry is in long-run equilibrium at a price of $5 per pound of chicken and a quantity of 50 million pounds per year.Suppose that WebMD claims that a protein found in chicken will increase your expected lifespan by 3 years.WebMD's claim will cause consumers to demand morechicken 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 WebMD's claim.109.SupplyDemand87SupplyD243D.210 102030405060708090100QUANTITY (Millions of pounds)In the long run, some firms will respond byexiting the industryuntilchicken populations grow large enough to support more firmsPRICE (Dollars per pound)LO

A) More Producing more chicken and earning positive economic profit The demand will rises because…

Suppose that WebMD claims that a protein found in chicken will increase your expected lifespan by 3 years. WebMD's claim vwill cause consumers to demand more chicken at every price. In the short run, firms will respond by

Suppose that WebMD claims that a protein found in chicken will increase your expected lifespan by 3 years. WebMD's claim vwill cause consumers to demand more chicken at every price. In the short run, firms will respond by

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 3PA: Suppose the price elasticity of demand for heating oil is 02. in the short run and 0.7 in the long...

See similar textbooks

Similar questions

2. Suppose General Electric, one of the largest suppliers of light bulbs, decides to discontinue its production of light bulbs. SELECTED THE CORRECT ANSWER a. Which of the following will occur in the market for light bulbs? -demand will increase -supply will decrease -demand will decrease -supply will increase b. Will General Electric's exit from the light bulb market result in a shortage or surplus of light bulbs at the previous price? Will the price of light bulbs _rise or fall? _shortage, fall _surplus, rise _shortage, rise _surplus, fall
8. Short-run and long run effects of a shift in demand Suppose that the tuna industry is in long-run equilibrium at a price of $5 per can of tuna and a quantity of 350 million cans per year. Suppose that WebMD daims that a protein found in tuna will increase your expected lifespan by 2 years. WebMD's claim will cause consumers to demand more PRICE (Dollars per cani producing more tuna and earning positive profit Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of WebMD's claim. ? 0 tuna at every price. In the short run, firms will respond by Supply Demand 70 140 210 200 350 420 400 560 630 700 QUANTITY (Millions of cans) Demand -0 Supply
1. The market for manicures and other nail treatments is very competitive. How would the following developments affect the number of nail treatments that a typical nail salon wants to supply in the short run? a. Heightened concern about their appearance causes people to want more manicures at a given price. b. The government requires all nail salons to pay a new yearly licensing fee to operate. c. Worse job prospects elsewhere in the economy cause more people to want to become manicurists, causing the wages of manicurists to fall.
Alex's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Alex produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Alex faces. As you can see, to sell the additional engine, Alex must lower his price from $80,000 to $40,000 per fire engine. Note that while Alex gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. RICE (Thousands of dollars per fire engine) 78°F Sunny 200 180 F1 160 140 120 100 80 60 40 F2 -0- F3 0+ F4 Demand F5 Revenue Lost Revenue Gained OL…
10. Price elasticity of supply in the short run and long run The following graph shows the long-run supply curve for pistachios. Place the orange line (square symbol) on the following graph to show the most likely short-run supply curve for pistachios. (Note: Place the points of the line either on Y and V or on Y and S.) PRICE (Dollars per pound) 48 40 8 0 0 Y 4 O S V Long-Run Supply 2 6 8 10 QUANTITY (Thousands of pounds of pistachios) 12 Short-Run Supply (?)
12. What will happen to the market supply curve of gadgets if a new gadget producer enters the market? It will not change. It will become more elastic. There is insufficient data to determine. It will shift right at every price with more output supplied. It will shift left at every price with less output supplied.
Procter & Gamble Co. is a major soap producer. All of the following, except one, would shift its supply curve of liquid soap to left . Which is the exception?a. an increase in the price of bar soapb. an increase in the price of a key ingredient of liquid soapc. environmental regulations force Procter & Gamble to use a more costly technology to produce liquid soapd. a decrease in the price of liquid soape. an increase in the wage rate for factory workers who produce liquid soap
Suppose that the tuna industry is in long-run equilibrium at a price of $5 per can of tuna and a quantity of 200 million cans per year. Suppose the Public Health Agency of Canada (PHAC) issues a report saying that eating tuna is bad for your health. 1st GRAPH: The PHAC's report will cause consumers to demand ____ (less OR more) tuna at every price. In the short run, firms will respond by ______ (exiting the industry OR producing the same amount of tuna and running at a loss OR producing less tuna and running at a loss OR producing more tuna and earning positive profit OR entering the industry OR producing the same amount of tuna and earning positive profits) In the long run, some firms will respond by ______ (producing more tuna and earning positive profit OR producing less tuna and running at a loss OR exiting the industry OR producing less tuna and earning positive profit OR entering the industry OR producing more tuna and running at a loss) until _______ (tuna population…
10. Price elasticity of supply in the short run and long run The following graph shows the short-run supply curve for persimmons. Place the orange line (square symbol) on the following graph to show the most likely long-run supply curve for persimmons. (Note: Place the points of the line either on W and P or on W and I.) PRICE (Dollars per pound) 24 20 Co 16 0 0 W Short-Run Supply 2 4 6 8 10 QUANTITY (Thousands of pounds of persimmons) 12 Long-Run Supply ?
10. Price elasticity of supply in the short run and long run The following graph shows the long-run supply curve for pistachios. Place the orange line (square symbol) on the following graph to show the most likely short-run supply curve for pistachios. (Note: Place the points of the line either on N and K or on N and H.) PRICE (Dollars per pound) 48 908 40 0 8 0 0 O 4 N H D Long-Run Supply 2 6 8 10 QUANTITY (Thousands of pounds of pistachios) 12 10 Short-Run Supply (?)
In the long run, some firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the viral video and the new long- run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per pound) 2 1 0 0 Supply Demand until 40 60 80 100 120 140 160 100 200 QUANTITY (Millions of pounds) Demand 1 Supply The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long
10. Price elasticity of supply in the short run and long run The following graph shows the long-run supply curve for pecans. Place the orange line (square symbol) on the following graph to show the most likely short-run supply curve for pecans. (Note: Place the points of the line either on Y and V or on Y and S.) PRICE (Dollars per pound) 24 20 16 12 co 0 0 D 4 ● S OL Long-Run Supply 2 6 8 10 QUANTITY (Thousands of pounds of pecans) 12 Short-Run Supply