Leading up to the 2007-2009 Financial Crisis, companies like AIG developed financial products divisions which wrote billions of dollars worth of financial insurance contracts, called , which later bankrupted the company.

credit default swaps

Explanation:

Credit default swaps is an arrangement where the party selling a credit default swap agrees to insure the buyer against debt default or other credit event.

When a buyer is purchases a CDS he makes a series of payments to the seller over time for the value of the CDS, an is covered in case where the asset defaults.

In this scenarioAIG developed financial products divisions which wrote billions of dollars worth of financial insurance contracts.

These were credit default swaps that caused bankruptcy of the company because it bore all the credit risk.

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.