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run. PRICE (Dollars per pound) Suppose that the seitan industry is initially operating in long-run equilibrium at a price level of $5 per pound of seitan and quantity of 75 million pounds per year. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in seitan are linked to chronic illness. The FDA's research is expected to cause consumers to demand less producing less seitan and running at a loss seitan 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 the FDA's research. 1 10 9 Supply Demand Demand ° 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Millions of pounds) In the long run, some firms will respond by -0- Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the FDA's research and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per pound) 1 10 9 Supply Demand 8 --- Supply Demand 0 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Millions of pounds) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long

run. PRICE (Dollars per pound) Suppose that the seitan industry is initially operating in long-run equilibrium at a price level of $5 per pound of seitan and quantity of 75 million pounds per year. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in seitan are linked to chronic illness. The FDA's research is expected to cause consumers to demand less producing less seitan and running at a loss seitan 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 the FDA's research. 1 10 9 Supply Demand Demand ° 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Millions of pounds) In the long run, some firms will respond by -0- Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the FDA's research and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per pound) 1 10 9 Supply Demand 8 --- Supply Demand 0 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Millions of pounds) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long

Essentials of Economics (MindTap Course List)
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 10PA
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run. PRICE (Dollars per pound) Suppose that the seitan industry is initially operating in long-run equilibrium at a price level of $5 per pound of seitan and quantity of 75 million pounds per year. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in seitan are linked to chronic illness. The FDA's research is expected to cause consumers to demand less producing less seitan and running at a loss seitan 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 the FDA's research. 1 10 9 Supply Demand Demand ° 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Millions of pounds) In the long run, some firms will respond by -0- Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the FDA's research and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per pound) 1 10 9 Supply Demand 8 --- Supply Demand 0 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Millions of pounds) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long
Transcribed Image Text:run. PRICE (Dollars per pound) Suppose that the seitan industry is initially operating in long-run equilibrium at a price level of $5 per pound of seitan and quantity of 75 million pounds per year. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in seitan are linked to chronic illness. The FDA's research is expected to cause consumers to demand less producing less seitan and running at a loss seitan 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 the FDA's research. 1 10 9 Supply Demand Demand ° 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Millions of pounds) In the long run, some firms will respond by -0- Supply until Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the FDA's research and the new long-run equilibrium after firms and consumers finish adjusting to the news. PRICE (Dollars per pound) 1 10 9 Supply Demand 8 --- Supply Demand 0 0 15 30 45 60 75 90 105 120 135 150 QUANTITY (Millions of pounds) The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long
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