A recession greatly affects the daily market demand for Maine lobsters, which can be described as QD = 3000 + 250I - 250P (I is the average American income in $1000s). Thanks to the recession, that average income falls from $32,000 to $24,000. All lobster fisherman are identical and face the same relationship between their total daily costs and daily output (q): TC = 1/2*q^2 + 4q + 200, which yields a marginal cost of MC = q + 4. You should assume that market output is the sum of all firm output (Q = N*q, where N is the number of lobster fishermen). Use this information to answer the following questions.

3.8.

In the long run, fishermen can sell their boats and find other work. What happens to the short-run supply curve when this occurs? This will continue until what point?

		A.Short-run market supply is unchanged. This continues until another force interferes in the market.
		B.Short-run market supply decreases. This continues until no boats are making a loss.
		C.Short-run market supply decreases. This continues until the recession ends.