1st blank: less, more 2nd blank: producing less chicken and running at a loss, p

Question

1st blank: less, more

2nd blank: producing less chicken and running at a loss, producing the same amount of chicken and earning positive profit, exiting the industry, entering the industry, producing the same amount of chicken and running at a loss, producing more chicken and earning positive profit

3rd blank: exiting the industry, producing more chicken and running at a loss, producing more chicken and earning positive profit, producing less chicken and earning positive profit, producing less chicken and running at a loss, entering the industry

4th blank: new technologies are discovered that lower costs, each firm in the industry is once again earning zero profit, consumer demand returns to its original level, chicken populations grow large enough to support more firms

5th blank: upward sloping, vertical, horizontal, downward sloping

Explanation / Answer

1st Blank: Less

2nd Blank: producing less chicken and running at a loss.

[explaination: The Surgeon General's report causes demand for chicken to decrease. In the short run, the number of firms in the chicken industryis fixed. Therefore,the shift in demand causes a movement along the short-runsupply curve. The price of chicken decreases, and each firm produces less chicken than before. Because the chicken industrywas originallyin long-runequilibrium,firms were earning zero profit before the Surgeon. General's announcement.Therefore,a decrease in price would cause firms to be running at a loss].

3rd Blank: exiting the industry

4th Blank: each firm in the industry is once again earning zero profit.

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