1. lessmore 2. producing the same amount of chicken and running at a

Home 1. lessmore 2. producing the same amount of chicken and running at a

1. lessmore 2. producing the same amount of chicken and running at a

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  • 01 Feb, 2019

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ANSWERS (5)

The assumptions are given as:

The long run equilibrium price per pound of chicken: $5

Quantity demanded per year: 450 million can

The chemical has been identified in the chicken, thus it would decrease the demand of the chicken.

The companies would decrease the prices as well, therefore, the revenue of the of the company will be very less for the short term, because of less demand of the products even at the lesser prices.

 

In the long run, if the industry would be surviving at the zero profit, thus after a period of time, some firms would exit the market.

In the long run market scenario, the supply curve of the industry would be horizontal. As the cost of the industry will remain constant and the firms will urge to earn at least equal to the minimum average cost of the product. Thus, the output supplied by the industry will be shown as the horizontal curve in the graph.

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