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Course code: ECON1008 | Course name: Principles of Economics |
Assignment no.2 | Due date: Week 8 |
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Student Signature: | Date: 25 April 2011 |

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  1. Assuming a competitive market, explain with the aid of a market model how the price and quantity of Easter eggs is established.

Market model above is a display of balance between both the supply of Chocolate Easter eggs and the demand for Chocolate Easter eggs. According to Jackson (2007), the equilibrium point of this market model is indicated by the intersection point of the supply curve and demand curve of the product mentioned. We can then witness both the equilibrium price and quantity in the Easter egg market through applying the concept as stated earlier. Jackson (2007) also points out that whenever the demand increases, it will bring an effect to the supply, thus the market price will be affected as well. With other things being equal, an increase in demand will cause both price and quantity increment.
As we can see in the supply and demand model below, the demand...