International imports (i2) has two divisions, l and h. division l is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. division h is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. division h is considering a project with an expected return of 12%. should international imports (i2) accept or reject the project? accept the project reject the project

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.