Assignment on Business Economics

Running head: BUSINESS ECONOMICS
Business Economics
Name of the Student
Name of the University
Author note

1BUSINESS ECONOMICS
Table of Contents
Answer 3..........................................................................................................................................2
Answer 4..........................................................................................................................................3
Case 1...........................................................................................................................................3
Case 2...........................................................................................................................................4
Case 3...........................................................................................................................................5
References........................................................................................................................................6

2BUSINESS ECONOMICS
Answer 3
Figure 1: Market for Watermelon in summer
Price and quantity in the market is determined depending on the twin effect of demand and
supply in the market. Different demand and supply influencing factors changes that leads to a
change in change in equilibrium price and quantity. Change in taste and preferences cause a
change in demand reflected from an inward or outward shift of the demand curve. Similarly
supply changes when factor influencing production changes (Mankiw 2014). The situation of the
watermelon market is defined above. Equilibrium price is P* and corresponding quantity in the
market in Q*. During summer people prefers watermelon to any other season. This raises
demand for watermelon. When demand raises then price tend to be increased. However, there is
another factor to consider. The supply condition also changes in summer. Because of favorable