1. Graphing Basics

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9. $ 0 Q $9 $8 $7 $6 $5 $4 $3 $2 $1 1 2 3 4 5 6 7 8 9 10 11 PRICEQty supplied Qty demanded $ 9111 $ 793 $ 566 $ 339 $ 1111 S1 D1 SUPPLY & DEMAND

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:

11. Supply schedule for lobsters Demand schedule for lobsters Price of Lobster (per pound) Quantity of Lobster Supplied $25800 20700 15600 10500 5400 Price of Lobster (per pound) Quantity of lobster demanded $25200 20400 15600 10800 51,000 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/nceskids/createagraph/ http://nces.ed.gov/nceskids/createagraph/

13. 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) $25100 20300 15500 10700 5900 Price of Lobster (per pound) Quantity of lobster demanded by Americans $25200 20400 15600 10800 51,000

14. Supply schedule for lobsters New Demand schedule for lobsters Price of Lobster (per pound) Quantity of Lobster Supplied $25800 20700 15600 10500 5400 Price of Lobster (per pound) Quantity of lobster demanded $25300 20700 151100 101500 51900

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. 8. On Thursday nights, a local restaurant has a pasta special. Ari likes the restaurant’s 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 28 36 44 52 60 Chapter 4 / CONSUMER and PRODUCER SURPLUS

17. Quantity of pasta (servings) Willingness to pay for pasta (per serving) 1$10 28 36 44 52 60 Ari’s Pasta Demand 0 1 2 3 4 5 6 10 9 8 7 6 5 4 3 2 1 0 a.If the price of a serving of pasta is $4, how many servings will Ari buy?

18. How much consumer surplus does he receive? Quantity of pasta (servings) Willingness to pay for pasta (per serving) 1$10 28 36 44 52 60 Ari’s Pasta Demand 0 1 2 3 4 5 6 10 9 8 7 6 5 4 3 2 1 0 PRICE of $4 +$6 +$4 +$2

19. 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? Quantity of pasta (servings) Willingness to pay for pasta (per serving) 1$10 28 36 44 52 60

20. 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? Quantity of pasta (servings) Willingness to pay for pasta (per serving) 1$10 28 36 44 52 60

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?