In Maine, you must have a license to harvest lobster commercially; these licenses are issued yearly. The
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a. In the absence of government restrictions, what are the equilibrium price and quantity?
b. What is the demand price at which consumers wish to purchase 80,000 pounds of lobsters?
c. What is the supply price at which suppliers are willing to supply 80,000 pounds of lobsters?
d. What is the quota rent per pound of lobster when 80,000 pounds are sold? Illustrate the quota rent and the deadweight loss on the diagram.
e. Explain a transaction that benefits both buyer and seller but is prevented by the quota restriction.
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