Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 250 million pounds per year. Suppose the Surgeon General issues a report saying that eating shrimp is good for your health. The Surgeon General's report will cause consumers to demand shrimp at every price. In the short run, firms vill respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the Surgeon General's report. 10 Supply Demand 7 Supply Demand 1 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Millions of pounds) In the long run, some firms will respond by. until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the Surgeon General's report and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per pound)

Suppose that the shrimp industry is in long-run equilibrium at a price of $5 per pound of shrimp and a quantity of 250 million pounds per year. Suppose the Surgeon General issues a report saying that eating shrimp is good for your health. The Surgeon General's report will cause consumers to demand shrimp at every price. In the short run, firms vill respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the Surgeon General's report. 10 Supply Demand 7 Supply Demand 1 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Millions of pounds) In the long run, some firms will respond by. until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the Surgeon General's report and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per pound)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 6CQQ

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Similar questions

A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
What prevents a perfectly competitive firm from seeking higher profits by increasing the price that it charges?
Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?
Firms ill a perfectly competitive market are said to be price takers that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
Productive efficiency and allocative efficiency are two concepts achieved in the long mm in a perfectly competitive market. These are the two reasons why we call them perfect. How would you use these two concepts to analyze other market structures and label them imperfect?