ECO402 Assignment 1 Solution Spring 2017

The Case: Fruits, vegetables, fish and dry fruits are very important for human being. Majority doctors recommend fish in regular diet because it is high protein and low fat food that provides health benefits. Fish is generally considered better than heart damaging red meat and lean poultry. Fishery and fishing industry plays a significant role in the economy of Pakistan. This industry not only provides food but also the employment opportunities to many citizens. Pakistan is one of the important exporters of fish. Suppose, quantity demanded and quantity supplied equations for fish in domestic market is given below:

Qd = 3700 – 3P Qs = 1900 + 15P

Requirements: Keeping in mind the above scenario, solve the following questions.

a. Find equilibrium price and equilibrium quantity for fish in the domestic market. Also show equilibrium condition graphically.

b. Suppose doctors suggest that people must eat fish once in a week for their better health then, what would be its effect on equilibrium situation? Illustrate graphically.

c. Suppose the price of fish is 150 rupees per kilogram in domestic market then what would be the quantity demanded and quantity supplied of fish in the domestic market. Also indicate what would be the domestic market condition either it is in surplus or in shortage. Complete the following table.