Business Economics

Assignment 1

Full marks: 20 marks

There are TWO questions in this individual assignment which accounts for 10% of the course total. Answer all questions. Keep your answers clear, concise and succinct.       You are required to provide hand-written answers on “Standard Answer Sheet” and convert your answers into one single PDF file. Upload the PDF file to “Assignment 1 Collection Box” on SOUL of your class on or before 20 October 2022, 23:59 pm.

You are given sufficient time (one week) to finish this assignment, but you should be able to finish it in around 45 minutes if you are familiar with the content covered in the past few weeks.

1.         (9 marks)

Read the following article and answer the following questions.

Lime prices on the rise

One of the most dynamic and sought-after tropical fruits on the

market, limes have become a mainstay for consumers all over the  globe. Scientists find that the juice and skin of limes are high in antioxidants which  can protect the cell damage that free radicals cause, known as oxidative stress. Thus, its demand shows no signs of slowing.

However, supply is limited to a handful of locations, namely Mexico, Brazil, India,   and China. In 2022, the lack of rain in the citrus-producing region in Brazil caused    lower production of its limes. Extreme weather around the globe also affects the lime production in other production regions in a similar way.

Lime growers predict that less limes can be sold but the price will edge higher in the lime market in 2022.

(Modifiedfrom the article in https://theproducenews.com/headlines/lime-prices-rise)

Use a well-labeled supply-and-demand diagram to illustrate the effect of the above    factors on the equilibrium price and quantity of the lime market. Briefly explain your answer.                                                                                                            (9 marks)