(Solved): 8. Short-run and long-run effects of a shift in demand Suppose that the seitan industry is initiall ...

8. Short-run and long-run effects of a shift in demand Suppose that the seitan industry is initially operating in long-run equilibrium at a price level of \( \$ 5 \) per pound of seitan and quantity of 175 million pounds per year. Suppose that the Food and Drug Administration (FDA) reports that compounds naturally occurring in seitan are linked to chronic illness. The FDA's research is expected to cause consumers to demand seitan at every price, In the short run, firms will responid by Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the FDA's research and the ne long-run equilibrium after firms and consumers finish adjusting to the news. The new equillbrium price and quantity suggest that the shape of the long-run supply curve in this industry is runt.