Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 14

Suppose the daily demand curve for flounder at Cape May is given by Q D = 1,600 - 600P, where Q D is demand in pounds per day and P is price per pound.
a. If fishing boats land 1,000 pounds one day, what will the price be?
b. If the catch were to fall to 400 pounds, what would the price be?
c. Suppose the demand for flounder shifts outward to
Q D - 2,200 - 600 P
How would your answers to part a and part b change?
d. Now assume that Cape May fishermen can, at some cost, choose to sell their catch elsewhere.
Specifically, assume that the amount they will sell in Cape May is given by
Qs = -1,000 + 2,000P for Qs ? 0
where QS is the quantity supplied in pounds and P is the price per pound. What is the lowest price at which flounder will be supplied to the Cape May market?
e. Given the demand curve for flounder, what will the equilibrium price be?
f. Suppose now demand shifts to
Q D - 2,200 - 600 P What will be the new equilibrium price?
g. Explain intuitively why price will rise by less in part f than it did in part c. Graph all your results.