Short-run and long-run effects of a shift in demand Suppose that the perfectly competitive turkey industry is in long-run equilibrium at a price of $3 per pound of turkey and a quantity of 600 million pounds per year. Suppose the Surgeon General issues a report saying that eating turkey is bad for your health.
The Surgeon General's report will cause consumers to demand (more/less) turkey at every price. In the short run, firms will respond by
(entering the industry, producing less turkey and running at a loss, producing the same amount of turkey and running at a loss, exiting the industry, producing the same amount of turkey and earning positive profit, producing more turkey and earning positive profit)
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.
I cant put a picture of the graph I will describe it but on the horizontal line the numbers are 0 200 400 600 800 1000 and 1200, on the verticle line starting at the top the numbers are 6 5 4 3 2 1 and 0. The demand line coordinants are (6,0) (5,200) (4,400) (3,600) (2,800) (1,1000) and (0,1200). the supply line coordinants are (6,1200) (5,1000) (4,800) (3,600) (2,400) (1,200) and (0,0)
In the long run, some firms will respond by (producing more turkey and running at a loss, producing more turkey and earning positive profit, entering the industry, producing less turkey and earning positive profit, producing less turkey and running at a loss, exiting the industry)
until (consumer demand returns to its original level, turkey 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).
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. (using the same chart as before)