1. Suppose that the supply schedule of Maine lobsters is as follows:
a. Draw the demand curve and the supply curve for Maine lobsters. What is the equilibrium price and quantity of lobsters?
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?
2. 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 Middling today
b. 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
c. The market for an hour of babysitting services 30 years into the future, when children born today are likely to be having children of their own.