Macroeconomics Unit 3 Homework Answers
Suppose that the supply schedule of Maine lobsters is as follows:
Suppose that Maine lobsters can be sold only in the United States. The U.S.
demand schedule for Maine lobsters is as follows:
Draw the demand curve and the supply curve for Maine lobsters. What is the
equilibrium price and quantity of lobsters?
Now suppose that Maine lobsters can be sold in France. The French demand
schedule for Maine lobsters is as follows:
What is the demand schedule for Maine lobsters now that French consumers
can also buy them? Draw a
supply and demand diagram that illustrates the new
equilibrium price and quantity of lobsters. What will happen to the price at which
fishermen can sell lobster? What will happen to the price paid by U.S.
What will happen to the quantity consumed by U.S. consumers?
The equilibrium price of lobster is $15 per pound and the equilibrium
quantity is 600 pounds, point
in the accompanying diagram.
The new demand schedule is obtained by adding together, at any given price,
the quantity demanded by American consumers and the quantity demanded by
French consumers, as shown in the following table.
The new equilibrium price of lobster is $20 per pound and the new equilibrium
quantity is 700 pounds, point
in the accompanying diagram. The opportunity to
sell to French consumers makes Maine fishermen better off: they sell more
lobster and at a higher price than before. U.S. consumers, however, are made
worse off: they must pay a higher price for lobster ($20 versus $15 per pound),
and as a result consume less lobster (400 versus 600 pounds).
The small town of Middling experiences a sudden doubling of the birth rate.
After three years, the birth rate returns to normal. Use a diagram to illustrate the
effect of these events on the following.
The market for an hour of babysitting services in Middling today
The market for an hour of babysitting services 14 years into the future, after
the birth rate has returned to normal, by which time children born today are old
enough to work as babysitters
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