Question

Suppose that the turkey industry is in long-run equilibrium at a price of $5 per pound of turkey and a quantity of 50 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 turkey at every price. In the short run, firms will respond by _________.

Answer 1

Less; Producing less turkey

Step-by-step explanation:

Given that,

Long run equilibrium price = $5 per pound of turkey

Long run equilibrium quantity = 50 pounds per year

Now, suppose a report says that eating turkey is bad for your health then this will induces consumers to purchase less quantity of turkey. This will shift the demand curve of turkey leftwards and will results in a fall in both equilibrium quantity and equilibrium price level.

In a short run, at this level of consumer's demand, the firm will respond by producing the less amount of turkey and it running a loss because of lower price.