The city of Pawnee issues a fixed number of fishing licenses each year. (LO5-4)

a. Using the accompanying graph, demonstrate the effect of a limit of 100 fishing licenses at a cost of

$20 per license.

b. Is there excess supply or demand for licenses? Label the excess supply or demand on the graph.

c. What is the maximum amount a person would be willing to pay on the black market for a license?

d. How much would Pawnee need to charge to eliminate the excess supply or demand?