Health Canada's report will cause consumers to demand 1. (less or more) tuna at every price. In the short run, firms will respond by 2. (exiting the industry, producing the same amount of tuna and running at a loss, producing more tuna and earning positive profit, entering the industry, producing the same amount of tuna and earning positive profit, producing less tuna and running at a loss) In the long run, some firms will respond by 3. ( entering the industry, producing less tuna and earning positive profit, producing more tuna and earning positive profit, exiting the industry, producing less tuna and running at a loss, producing more tuna and running at a loss) until 4. (consumer demand returns to its original level, tuna populations grow large enough to support more firms, new technologies are discovered that lower costs, each firm in the industry is once again earning zero profit) Assuming the long-run price and quantity are as you found in the preceding problem, the tuna industry is 5. (a decreasing-cost industry, a constant-cost industry, an increasing-cost industry ) Suppose that the perfectly competitive tuna industry is in long-run equilibrium at a price of $3 per can of tuna and a quantity of 600 million cans peryear. Suppose Health Canada issues a report saying that eating tuna is bad for your health.Health Canada's report will cause consumers to demandtuna at every price. In the short run, firms will respond byShift the supply curve, the demand curve, or both on the following diagram to illustrate these short-run effects of Health Canada's announcement.Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps backto its original position, just drag it a little farther.SupplyDemandSupplyDemand20040000B0010001200QUANTITY (Milons of cans)In the long run, some firms will respond byuntilShift the supply curve, the demand curve, or both on the following diagram to illustrate both the short-run effects of Health Canada's announcementand the new long-run equilibrium after firms and consumers finish adjusting to Health Canada's announcement.(ueD adseod 3ORId 20040010001200QUANTITY (Mlions of cans)In the long run, some firms will respond byuntilShie the supply curve, the demand curve, or both on the following diagram to lustrate both the short-run effects of Health Canada's announcementand the new long-run eouilibrum after firms and consumers finish adjusting to Mealth Canada's announcement.SupplyDemandSupplyDemand2040010010001200QUANTITY (Mlons of cans)Assuming the long-run price and quantity are as you found in the preceding problem, the tuna industry isPRICE Dolanper can)

Tuna Fish are among the world's most well-known fish and consequently among the most industrially…

Answered: Health Canada's report will cause…

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 6.11P

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Health Canada's report will cause consumers to demand 1. (less or more) tuna at every price. In the short run, firms will respond by 2. (exiting the industry, producing the same amount of tuna and running at a loss, producing more tuna and earning positive profit, entering the industry, producing the same amount of tuna and earning positive profit, producing less tuna and running at a loss)

In the long run, some firms will respond by 3. ( entering the industry, producing less tuna and earning positive profit, producing more tuna and earning positive profit, exiting the industry, producing less tuna and running at a loss, producing more tuna and running at a loss) until 4. (consumer demand returns to its original level, tuna populations grow large enough to support more firms, new technologies are discovered that lower costs, each firm in the industry is once again earning zero profit)

Assuming the long-run price and quantity are as you found in the preceding problem, the tuna industry is 5. (a decreasing-cost industry, a constant-cost industry, an increasing-cost industry )

Suppose that the perfectly competitive tuna industry is in long-run equilibrium at a price of $3 per can of tuna and a quantity of 600 million cans per
year. Suppose Health Canada issues a report saying that eating tuna is bad for your health.
Health Canada's report will cause consumers to demand
tuna 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 Health Canada's announcement.
Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back
to its original position, just drag it a little farther.
Supply
Demand
Supply
Demand
200
400
00
B00
1000
1200
QUANTITY (Milons of cans)
In the long run, some firms will respond by
until
Shift the supply curve, the demand curve, or both on the following diagram to illustrate both the short-run effects of Health Canada's announcement
and the new long-run equilibrium after firms and consumers finish adjusting to Health Canada's announcement.
(ueD adseod 3ORId

200
400
1000
1200
QUANTITY (Mlions of cans)
In the long run, some firms will respond by
until
Shie the supply curve, the demand curve, or both on the following diagram to lustrate both the short-run effects of Health Canada's announcement
and the new long-run eouilibrum after firms and consumers finish adjusting to Mealth Canada's announcement.
Supply
Demand
Supply
Demand
20
400
100
1000
1200
QUANTITY (Mlons of cans)
Assuming the long-run price and quantity are as you found in the preceding problem, the tuna industry is
PRICE Dolanper can)

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