Question

The surgeon general's report will cause consumers to demand less turkey at every price. In the short run, firms will respond by producing less turkey and running at a loss?

Answer 1

The surgeon general's report will cause a decrease in turkey demand, leading firms to produce less turkey while running at a loss in the short run. This is due to higher costs of production, resulting in lower profits and a leftward shift in the supply curve.

Step-by-step explanation:

In this case, the statement suggests that the surgeon general's report will cause consumers to demand less turkey at every price. As a result, firms in the short run will respond by producing less turkey to match the decrease in demand. However, it is mentioned that firms will be running at a loss, which means that their costs of production are higher than their revenue from selling turkey.

When a firm faces higher costs of production, it typically leads to lower profits. This lower profitability may cause firms to reduce their production quantity to smaller levels at any given price. The supply curve would shift to the left, indicating a decrease in turkey supply.