Questions:
Question. 1
In a recent study, the supply schedule of lobsters from the Atlantic provinces was determined to be:
Price of lobster Quantity of lobster supplied
(per pound) (pounds)
$25 800
$20 700
$15 600
$10 500
$ 5 $ 400$
Suppose these lobsters can only be sold in Canada. The Canadian demand schedule for Atlantic lobsters is:
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 of Atlantic lobsters. What is the equilibrium price and quantity of lobsters?
Suppose now Atlantic lobsters can be sold in France. The French demand schedule for Atlantic lobsters is given below: In a recent study, the supply schedule of lobsters from the Atlantic provinces was determined to be:
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 Atlantic 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 Atlantic lobster fishermen can sell lobster? What will happen to the price paid by Canadian consumers of Atlantic lobster? What will happen to the quantity of Atlantic lobster consumed by Canadians?
Question. 2
In Rolling Stone magazine, several rock stars, including Pearl Jam, and fans were bemoaning the high price of concert tickets. One superstar argued, "It just isn't worth $75 to see me play. No one should have to pay that much to go to a concert." Assume this star sold out arenas around the country at an average ticket price of $75.
a. How would you evaluate the arguments that ticket prices are too high?
b. Suppose that due to this star's protests, ticket prices were lowered to $50.In what sense is this price "too low"? Draw a diagram using supply and demand curves to support your argument.
c. Suppose Pearl Jam really wanted to bring down ticket prices. Since the band controls the supply of its services, what do you recommend they do? Explain using a supply and demand diagram.
d. Suppose the band's next CD was a total dud. Do you think they would still have to worry about ticket prices being "too high"? Why or why not? Draw a supply and demand diagram to support your argument.
e. Suppose the group announced this was going to be their last tour. What effect would this likely have on the demand and price of tickets? Illustrate with a supply and demand diagram.