Assignment
Question:
The small town of Middling experiences a sudden doubling of the birth rate. After 3 years, the birth rate returns to normal. Use the graphs for each question, adding any arrows or other indicators that you feel are necessary, to illustrate the effect of these events on the following.
1. What is the effect on the market for an hour of babysitting services in Middling today, during this increased birthrate? Explain the change, if any in the price of babysitting, and in both the amount of babysitting demanded and supplied, giving your reasons for these changes.
2. What is the effect on 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, during this increased birthrate, will be old enough to work as babysitters? Explain the change, if any in the price of babysitting, and in both the amount of babysitting demanded and supplied, giving your reasons for these changes.
3. What is the effect on the market for an hour of babysitting services 30 years into the future, when children born today, during this increased birthrate, will be adults and are likely to be having children of their own? Explain the change, if any in the price of babysitting, and in both the amount of babysitting demanded and supplied, giving your reasons for these changes.
4. Answer a, b, c, and d using the following information:
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:
Price of lobster Quantity of lobster demanded
(per pound) (pounds)
$ 25 200
$ 20 400
$ 15 600
$ 10 800
$ 5 1,000
a. Looking at both the schedules of supply and demand, as well as the graph of the demand and supply curve for MaineLobsters, what is the equilibrium price of lobsters and the equilibrium quantity of lobsters demanded and supplied at that price?
b. Now, suppose that Maine lobsters can also be sold in France.The French demand schedule for Maine lobsters is asfollows:
Price of lobster Quantity of lobster demanded
(per pound) (pounds)
$ 25 100
$ 20 300
$ 15 500
$ 10 700
$ 5 900
What is the demand schedule for Maine lobsters now thatFrench consumers can also buy them?
c. Using the combined U.S. and French demand schedule, the U.S. demand schedule and the supply schedule, and the graph below, analyze the change in the market for lobsters. (hint: use the 10 question Worksheet approach) Explain your analysis and answer these two questions.
1.What will happen to the price at which fishermen can sell lobster?
2.What will be the final output of lobsters?
d.What will happen to the price paid by U.S. consumers?
What will happen to the quantity consumed by U.S. consumers?