Suppose that the turkey industry is in long-run equilibrium at a price of $5 per pound of turkey and a quantity of 400 million pounds per year. suppose the surgeon general issues a report saying that eating turkey is bad for your health.

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Nikolai Valencia

Business

18 September, 23:14

Suppose that the turkey industry is in long-run equilibrium at a price of $5 per pound of turkey and a quantity of 400 million pounds per year. suppose the surgeon general issues a report saying that eating turkey is bad for your health.

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Abril Collins · Answer 1

Answer: In the short-run, there will be a decrease in the price of Turkey. However, in the long-run the initial equilibrium price will be restored.

Explanation: In the short-run the surgeons report that eating turkey is bad for you health will lead to a fall in demand for Turkey at each price level, shifting the demand curve to the left. However, it is not possible for suppliers to adjust supply in the short-run. As a result, the price of Turkey will decrease making producers earn losses in the short-run. The losses will induce some producers to leave the market, which will shift the supply curve up to the left, driving the equilibrium price back to its initial level till economic losses are completely eliminated.