Answered: Suppose that the perfectly competitive…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter22: Perfect Competition

Section: Chapter Questions

Problem 4QP

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Suppose that the perfectly competitive chicken industry is in long-run equilibrium at a price of $3 per pound of chicken and a quantity of 600 million pounds per year. Suppose the Surgeon General issues a report saying that eating chicken is good for your health.

The Surgeon General's report will cause consumers to demand chicken 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 the Surgeon General'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.

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 the Surgeon General’s announcement and the new long-run equilibrium after firms and consumers finish adjusting to the Surgeon General's announcement.

Suppose that the perfectly competitive chicken industry is in long-run equilibrium at a price of $3 per pound of chicken and a quantity of 600 million
pounds per year. Suppose the Surgeon General issues a report saying that eating chicken is good for your health.
The Surgeon General's report will cause consumers to demand
Shift the supply curve, the demand curve, or both on the following diagram to illustrate these short-run effects of the Surgeon General'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.
PRICE (Dollars per pound)
10
0
0
Supply
Demand
chicken at every price. In the short run, firms will respond by
400
800
1000
200
600
QUANTITY OF OUTPUT (Millions of pounds)
1200
Demand
Supply
?

In the long run, some firms will respond by
Shift the supply curve, the demand curve, or both on the following diagram to illustrate both the short-run effects of the Surgeon General's
announcement and the new long-run equilibrium after firms and consumers finish adjusting to the Surgeon General's announcement.
?
PRICE(Dollars per pound)
3
N
0
0
Suppl
Demand
200
400
800
1000
QUANTITY OF OUTPUT (Millions of pounds)
1200
Demand
until
Supply

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