Economics, Quantitative demand for watermelons = 50-3P(wm) - 20P(hd) + 10 P(sc) +, Business Economics

Economics, Business Economics

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Quantitative demand for watermelons = 50-3P(wm) - 20P(hd) + 10 P(sc) + 0.001(income)
P(wm) = $4.00
P(hd) = $3.00
P(sc) = $2.00
Income = $40,000

Quantity supply of watermelons = 22 + 4P(wm)

A) What is the quantitative effect of a 5% demand shock in the watermelon market? Determine the effect on price, quantity demanded, and quantity supplied of watermelon.

B) Now consider a simultaneous supply shock in the watermelon market of -10% due to an extreme drought. This supply shock occurs at the same time as the 5% demand shock. Determine the effect on price, quantity demanded, and quantity supplied of watermelon.

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Economics, Business Economics

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