Figure 12-11
-Refer to Figure 12-11.Assume that the medical screening industry is perfectly competitive and that some firms are making short-run losses.Suppose the medical screening industry runs an effective advertising campaign which convinces a large number of people that yearly CT scans are critical for good health.Which of the diagrams in the figure best describes what happens in the industry?

Question

Figure 12-11 
-Refer to Figure 12-11.Assume that the medical screening industry is perfectly competitive and that some firms are making short-run losses.Suppose the medical screening industry runs an effective advertising campaign which convinces a large number of people that yearly CT scans are critical for good health.Which of the diagrams in the figure best describes what happens in the industry?

Quizplus · Accepted Answer

Panel D shows the likely outcome of an effective advertising campaign on the medical screening industry. As demand increases due to the campaign, the demand curve shifts rightward, leading to a new equilibrium with a higher price and quantity. This increase in price and quantity should help firms in the industry to cover their costs and earn positive profits in the long run.

Figure 12-11 -Refer to Figure 12-11.Assume That the Medical Screening Industry Is