3 suppose that the supply schedule of maine lobsters

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3. Suppose that the supply schedule of Maine lobsters is as follows: Price of lobster Quantity of lobster supplied (per pound) (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:
BU.220.620 Fall 1 2017 Economics for Decision Professor: Magdalena Barreiro, Ph.d Price of lobster Quantity of lobster demanded (per pound) (pounds) $25 200 20 400 15 600 10 800 5 1,000 a. Draw the demand curve and the supply curve for Maine lobsters. What are 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: Price of lobster Quantity of lobster demanded (per pound) (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?
BU.220.620 Fall 1 2017 Economics for Decision Professor: Magdalena Barreiro, Ph.d
BU.220.620 Fall 1 2017 Economics for Decision Professor: Magdalena Barreiro, Ph.d 4. Do you think the price elasticity of demand for Ford sport-utility vehicles (SUVs) will increase, decrease, or remain the same when each of the following events occurs? Explain your answer. a. Other car manufacturers, such as General Motors, decide to make and sell SUVs. b. SUVs produced in foreign countries are banned from the American market. c. Due to ad campaigns, Americans believe that SUVs are much safer than ordinary passenger cars. d. The time period over which you measure the elasticity lengthens. During that longer time, new models such as four-wheel-drive cargo vans appear. a. The price-elasticity of demand for Ford SUVs will increase because more substitutes are available. b. The price elasticity of demand for Ford SUVs will decrease because fewer substitutes are available. c. The price elasticity of demand for Ford SUVs will decrease because other cars are viewed as less of a substitute. d. The price elasticity of demand for Ford SUVs will increase over time because more substitutes (such as four-

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