Question 1:

The demand for watermelons is highest during summer and lowest during winter. Yet watermelon prices are normally lower in summer than in winter. Use a demand and supply graph to demonstrate how this is possible. Be sure to carefully label the curves in your graph and to clearly indicate the equilibrium summer price and the equilibrium winter price.

Question 2:

Following are four graphs and four market scenarios, each of which would cause either a movement along the supply curve for Pepsi or a shift of the supply curve. Match each scenario with the appropriate graph.

a. A decrease in the supply of Coke.
b. A drop in the average household income in the United States from $44,000 to $43,000.
c. An improvement in soft drink bottling technology.
d. An increase in the prices of sugar and high- fructose corn syrup.