Answer to Question #298315 in Microeconomics for kye

Question

1. For each of the following statements, illustrate the effect of each event on the market for red snapper fish and indicate the effects on the equilibrium price and quantity.
2. A surgeon general warns that high-cholesterol foods such as beef cause heart attacks.
3. A new fishing wire reduces the time taken to harvest fish while at the same time there is a report that persons have developed food poisoning from consuming fish.

Answer 1

I i) As a result of the general surgeon's warning against high cholesterol diets, customers may swap red snapper fish for beef, hence raising demand for red snapper fish.

ii) The quantity of red snapper fish will increase as they are now more easily harvested, but demand for red snapper fish will decrease due to food poisoning reports. As a result, there will be a market surplus.