WendyEller-Assignment-Unit 3

# WendyEller-Assignment-Unit 3 - Wendy Eller BU 204-02AU...

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Wendy Eller BU 204-02AU November 01, 2009 Assignment-Unit 3 Chapter 3 Problem 5 Suppose the supply schedule of Maine lobsters is as follows (Represented in Blue): Price of Lobster (Per Pound) Quantity of Lobster Supplied (Pounds) \$25 800 \$20 700 \$15 600 \$10 500 \$5 400 Suppose that Maine lobsters can be sold only in the United States. The U.S. demand schedule for Maine lobsters is as follows (Represented in Red): Price of Lobster (Per Pound) Quantity of Lobster Demanded (Pounds) \$25 200 \$20 400

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\$15 600 \$10 800 \$5 1000 a. Draw the demand curve and the supply curve for Maine lobsters. What is the equilibrium price and quantity of lobsters? Equilibrium price is \$15.00 and the quantity is 600. (See next page for graph.) Now suppose that Maine Lobsters can be sold in France. The French demand schedule for Maine lobsters is as follows: Price of Lobster (Per Pound) Quantity of Lobster Demanded (Pounds) \$25 100 \$20 300 \$15 500 \$10 700 \$5 900
b. 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. consumers? What will happen to the quantity consumed by U.S. consumers? New Demand Schedule: Price of Lobster (Per Pound) Quantity of Lobster Demanded (Pounds) \$25 300 \$20 700 \$15 1100 \$10 1500 \$5 1900 The new equilibrium price is \$20.00 and the quantity is 700. The fishermen can increase their selling prices. The prices will also increase for the U.S. consumers. The quantity consumed by U.S. consumers will decrease due to the higher prices. Problem 14

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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: a. The market for an hour of babysitting services in the town of Middling today. The demand for an hour of babysitting rises when the birth rate doubles. After
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## This note was uploaded on 12/08/2009 for the course BU 204-02 taught by Professor Burge during the Fall '09 term at Kaplan University.

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WendyEller-Assignment-Unit 3 - Wendy Eller BU 204-02AU...

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