Suppose that the turkey industry is in long-run equilibrium at a price of $5 per pound of turkey and a quantity of 250 million pounds per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in turkey helps prevent many viral infections from spreading. The CDC’s announcement will cause consumers to demand turkey at every price. In the short run, firms will respond by less more Shift the demand curve, the supply curve, or both on the id graph to illustrate these short-run effects of the CDC’s announcement 10 9 Supply Demand 8 O Supply ICE (Dollars per pound)

Suppose that the turkey industry is in long-run equilibrium at a price of $5 per pound of turkey and a quantity of 250 million pounds per year. Suppose that the Centers for Disease Control (CDC) announces that a chemical found in turkey helps prevent many viral infections from spreading. The CDC’s announcement will cause consumers to demand turkey at every price. In the short run, firms will respond by raph to trate these short-run effects of the CDC’S announcement. entering the industry producing more turkey and earning positive profit producing less turkey and running at a loss producing the same amount of turkey and running at a loss producing the same amount of turkey and earning positive profit exiting the industry Demand 8 7 Supply 6 CE(Dollars per pound) 5

9 Supply 8 Demand 7 6 Supply PRICE (Dollars per pound) 3 Demand 2 1 + 0 0 50 100 450 500 150 200 250 300 350 400 QUANTITY (Millions of pounds) In the long run, some firms will respond by until

Demand 2 0 0 50 450 500 100 150 200 250 300 350 400 QUANTITY (Millions of pounds) In the long run, some firms will respond by until producing more turkey and running at a loss ort-run effects of the CDC’s announcer Shift the demand curve, the supply curve, or entering the industry new long-run equilibrium after firms and con producing more turkey and earning positive profit producing less turkey and earning positive profit producing less turkey and running at a loss exiting the industry 10 O 9 Supply Demand

Demand 1 0 050 450 500 100 150 200 250 300 350 400 QUANTITY (Millions of pounds) In the long run, some firms will respond by until new technologies are discovered that lower costs ng graph to illustrate both the short-run effects of the CDC’s announceme turkey populations grow large enough to support more firms ting to the news. each firm in the industry is once again earning zero profit ? consumer demand returns to its original level 10 9 Supply Demand

Supply Demand 3 7 Supply PRICE (Dollars per pound) Demand 1 downward sloping 0 horizontal 0 50 500 100 150 200 250 300 350 400 450 QUANTITY (Millions of pounds) vertical upward sloping The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is in the long run.