8. Short-run and long-run effects of a shift in demand Suppose that the chicken industry is in long-run equilibrium at a price of $5 per pound of chicken and a quantity of 300 million pounds per year. Suppose that WebMD claims that the bacteria found in chicken will decrease your expected lifespan by 3 years. chicken at every price. In the short run, firms will respond by WebMD's claim will cause consumers to demand Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run elffects or WEBMD's claim. 10 Supply Demand Supply Demand 60 120 180 240 300 300 420 480 540 600 QUANTITY (Millions of pounds) In the long run, some firms will respond by until PRICE (Dolars per pound) Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of WEDMD's claim and the new long- run equilibrium after firms and consumers finish adjusting to the news. 10 Supply Dermand Supply 31 Demand 60 120 180 240 30 360 420 480 540 600 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. (punod Jed sJBJog) zOIHd

# For a firm, the supply curve is given to be as:- 2P - 30 = Q And the demand curve is give to be as:- 15 - P = Q Calculate the equilibrium price and equilibrium Quantity

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Suppose production is reduced by 60 percent for each of the suppliers in this industry. Draw a new market curve and answer the following questions based on your new supply curve and the original demand curve. In Table 3.1, the equilibrium market quantity would be Table 3,3 Individual Demand and Supply Schedules. Quantity Demanded By: Price 4.00 Ali Kelly Jessie Market 4 1 3.00 8 2.00 12 1.00 16 3.00 10 2.00 5 1.00 0 17 units Quantity Supplied by: Price Andy Maria Jose Market 4.00 15 15 11 9 7 5 12 units 25 units 9746 10 units 2 1234 11 7 3