Lionfish is an aquatic invasive species in the southeastern U.S. and the Caribbe

Question

Lionfish is an aquatic invasive species in the southeastern U.S. and the Caribbean. Current removal policies focus on harvesting the lionfish for human consumption. However, a fishing license is required to fish in most southern states. Assume the supply of fishing licenses is Qs = 50 + 0.05L + 40P, where L = lionfish population and P = price of a fishing license, and the demand for fishing licenses is Qd = 1400 – 60P. What is the equilibrium price and quantity of fishing licenses when L = 1,000?

Explanation / Answer

Solution :

Equilibrium is achieved when demand = supply

Qs = Qd

50 + 0.05L + 40P = 1400 – 60P

when L = 1000

50 + 50 + 40P = 1400 - 60P

100+40P = 1400 - 60P

100P = 1500

P = $ 15 ( Equilibrium price)

Equilibrium quantity = 1400 - 60 X 15

Equilibrium quantity = 500 units .

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