This summer the lobster catch in Maine has been especially large, but instead of celebrating the fisherman are suffering from a lower total revenue. (Source: New York Times, July 28, 2012) As the lobster catch increases there is
A) a movement along the demand curve, resulting in a higher price and a decreased quantity.
B) a movement along the demand curve, resulting in a lower price and an increased quantity.
C) no change in either the price or the quantity.
D) a movement along the demand curve, resulting in a higher price and an increased quantity.

Question

Quizplus · Accepted Answer

An increase in the lobster catch means there is a larger supply of lobster. According to the law of supply and demand, an increase in supply will result in a decrease in price and an increase in quantity demanded. Therefore, there will be a movement along the demand curve, resulting in a lower price and an increased quantity. This explains why the fishermen are suffering from a lower total revenue, as they are selling more lobster but at a lower price.

This Summer the Lobster Catch in Maine Has Been Especially