Business Economics Assignment Report

Running head: Business Economics
Business Economics
Name of the Student
Name of the University
Student ID

Business Economics1
Table of Contents
Answer 2..........................................................................................................................................2
Answer 6..........................................................................................................................................3
Answer 7..........................................................................................................................................4
Answer 8..........................................................................................................................................6
Answer 9..........................................................................................................................................8
References........................................................................................................................................9

Business Economics2
Answer 2
(a) An increase in price of fertilizer that is used for growing peanut will increase the cost of
production. Thus, at the same cost the seller can supply less amount of peanuts than before.
Hence the supply for peanut will decrease causing shift of supply curve to the left from S to S1.
Therefore, the equilibrium price of peanuts will increase and quantity will drop. The new
equilibrium quantity and price is shown in figure 1 as Q* and P* respectively.
Figure 1: Decline in supply
Source: (Created by the Author)
(b) Taste of consumers have changes and they are prefer popcorn to peanuts. This will result into
fall in demand for peanuts and owing to this the demand curve shifts leftward causing fall in
quantity demanded and price in the market. The graphical illustration is given below in figure 2.
The demand curve has moved to D1 from D and the new equilibrium price and quantity is given
as P1 and Q1 respectively.