Suppose that the supply schedule of Maine lobsters is as follows:
|
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:
|
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?