HOMEWORK - UNIT 3

1
Graphing Basics
2

3

0
4

Low Price
0
5
High Price

Low Price
0
6
High Price

Low Price
0
Q
7
High Price

Low Price
0
Q
Very Few
8
High Price

Low Price
0
Q
Many Many
Very Few
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SUPPLY DEMAND
S1

• 9
• 8
• 7
• 6
• 5
• 4
• 3
• 2
• 1

PRICE Qty supplied Qty demanded
9 11 1
7 9 3
5 6 6
3 3 9
1 1 11

D1
0
1 2 3 4 5 6 7
8 9 10 11
Q
10
HOMEWORK - UNIT 3 SUPPLY AND DEMAND THE
MARKET STRIKES BACK Chapter 3 Problem 6 on
pages 90-91 Chapter 4 Problem 8 on page 115  

• Chapter 3 / SUPPLY and DEMAND
•  
• 6. Suppose that the supply schedule of Maine
  lobsters is as follows

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Supply schedule for lobsters Demand
schedule for lobsters
Price of Lobster (per pound) Quantity of Lobster Supplied
25 800
20 700
15 600
10 500
5 400
Price of Lobster (per pound) Quantity of lobster demanded
25 200
20 400
15 600
10 800
5 1,000
What is the equilibrium price and the equilibrium
quantity of lobsters?
12
a. Draw the demand curve and the supply curve
for Maine lobsters http//nces.ed.gov/nceskid
s/createagraph/
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Now suppose that Maine lobsters can be sold in
France. The French demand schedule for Maine
lobsters is as follows
Price of Lobster (per pound) Quantity of lobsters demanded by the French Quantity of lobsters demanded (total)
25 100
20 300
15 500
10 700
5 900
Price of Lobster (per pound) Quantity of lobster demanded by Americans
25 200
20 400
15 600
10 800
5 1,000
14
Supply schedule for lobsters New Demand
schedule for lobsters
Price of Lobster (per pound) Quantity of Lobster Supplied
25 800
20 700
15 600
10 500
5 400
Price of Lobster (per pound) Quantity of lobster demanded
25 300
20 700
15 1100
10 1500
5 1900
15
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?

16
Chapter 4 / CONSUMER and PRODUCER SURPLUS

• 8. On Thursday nights, a local restaurant has a
  pasta special. Ari likes the restaurants pasta,
  and his willingness to pay for each serving is
  shown in the accompanying table.

Quantity of pasta (servings) Willingness to pay for pasta (per serving)
1 10
2 8
3 6
4 4
5 2
6 0
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Aris Pasta Demand
10 9 8 7 6 5 4 3 2 1
0
Quantity of pasta (servings) Willingness to pay for pasta (per serving)
1 10
2 8
3 6
4 4
5 2
6 0
0 1 2 3 4 5 6

• If the price of a serving of pasta is 4, how
  many servings will Ari buy?

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Aris Pasta Demand
10 9 8 7 6 5 4 3 2 1
0
6
Quantity of pasta (servings) Willingness to pay for pasta (per serving)
1 10
2 8
3 6
4 4
5 2
6 0
4
2
PRICE of 4
0 1 2 3 4 5 6

• How much consumer surplus does he receive?

19
Quantity of pasta (servings) Willingness to pay for pasta (per serving)
1 10
2 8
3 6
4 4
5 2
6 0

• b.
• The following week, Ari is back at the restaurant
  again, but now the price of a serving of pasta is
  6. By how much does his consumer surplus
  decrease compared to the previous week?

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Quantity of pasta (servings) Willingness to pay for pasta (per serving)
1 10
2 8
3 6
4 4
5 2
6 0

• c.
• One week later, he goes to the restaurant again.
  He discovers that the restaurant is offering an
  all you can eat (in other words until you are
  not willing to eat anymore) special for 25. How
  much pasta will Ari eat, and how much consumer
  surplus does he receive now?

21

• d. Suppose you own the restaurant and Ari is a
  typical customer. What is the highest price you
  can charge for the all you can eat special and
  still attract customers?