Assume a manufacturing company provides the following information from its master budget for the month of May: Unit sales 5,000 Selling price per unit $ 40 Direct materials cost per unit $ 12 Direct labor cost per unit $ 10 Direct labor wage rate per hour $ 20 Predetermined overheard rate per direct labor-hour $ 16 If the company maintains no beginning or ending inventories, what is the budgeted gross margin for May

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.