The market for beef is in long-run equilibrium at a price of $3.25 per pound. the announcement that mad cow disease has been discovered in the united states reduces the demand for beef sharply, and the price falls to $2.00/pound. if the long-run supply curve is horizontal, then when long-run equilibrium is reestablished the price will be:

Question

Business

Jon Dennis

8 May, 07:21

The market for beef is in long-run equilibrium at a price of $3.25 per pound. the announcement that mad cow disease has been discovered in the united states reduces the demand for beef sharply, and the price falls to $2.00/pound. if the long-run supply curve is horizontal, then when long-run equilibrium is reestablished the price will be:

+4

Answers (1)

Know the Answer?

Giuliana Santiago · Answer 1

When the long run equilibrium is re-established, the price will be the amount at which a pound was selling initially, which is $3.25 per pound.

The announcement that mad cow disease has been discovered in the United states will momentarily lowers the demand for beef and the price will be forced to come down. But on the long run, the initial equilibrium price will be re-established.