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1. The demand for watermelon, which is harvested in summer, is highest during the summer months and lowest during winter months. Yet watermelon prices are normally lower in summer than in winter. Use the demand and supply graphs to illustrate and explain how this is possible. Clearly indicate the equilibrium price and equilibrium quantity in your graph.
2. Assume the government has removed all entry restrictions in an industry resulting in the creation of a perfectly competitive market structure. Using demand and supply graphs and cost curves illustrate and explain how this move will impact on the long run profit of these firms.
Given the uncertainty associated with the demand volume, and no other information to work with.
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