In Alabama, those who hunt and kill alligators for commercial purposes (that is, to sell them) must have a license. The state government places a limit on the number of commercial licenses it issues. For purposes of this question, assume that the number of wild alligators roaming around Alabama is unlimited. Suppose that the demand for Alabama alligator sausage increases. In the short run, what will happen to the price of Alabama alligator sausage, the profits of Alabama alligator sausage producers, and the number of Alabama alligator sausage producers? Explain your answers. In the long run, what will happen to the price of Alabama alligator sausage, the profits of Alabama alligator sausage producers, and the number of Alabama alligator sausage producers? Compare the long-run equilibrium to the equilibrium that existed before the increase in demand. Explain your answers.
In Alabama, those who hunt and kill alligators for commercial purposes (that is, to sell them) must have a license. The state government places a limit on the number of commercial licenses it issues. For purposes of this question, assume that the number of wild alligators roaming around Alabama is unlimited. Suppose that the demand for Alabama alligator sausage increases. In the short run, what will happen to the price of Alabama alligator sausage, the profits of Alabama alligator sausage producers, and the number of Alabama alligator sausage producers? Explain your answers. In the long run, what will happen to the price of Alabama alligator sausage, the profits of Alabama alligator sausage producers, and the number of Alabama alligator sausage producers? Compare the long-run equilibrium to the equilibrium that existed before the increase in demand. Explain your answers.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In Alabama, those who hunt and kill alligators for commercial purposes (that is, to sell them) must have a license. The state government places a limit on the number of commercial licenses it issues. For purposes of this question, assume that the number of wild alligators roaming around Alabama is unlimited.
Suppose that the
- In the short run, what will happen to the
price of Alabama alligator sausage, the profits of Alabama alligator sausage producers, and the number of Alabama alligator sausage producers? Explain your answers.
- In the long run, what will happen to the price of Alabama alligator sausage, the profits of Alabama alligator sausage producers, and the number of Alabama alligator sausage producers? Compare the long-run equilibrium to the equilibrium that existed before the increase in demand. Explain your answers.
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