UNIVERSITY OF SOUTH AUSTRALIAPrinciple of monetary – assignment 2
Made by Donald Produc
The price of fruit and vegetables keep increasing recently. Relating to John (2011), well-known salad and fresh drink have removed from the selections due to the go up of fresh fruit and veggie price following the Queensland avalanche. The research revealed that value of pumpkin has tripled from $1. 5 to $6 and price of pineapple include increased coming from $28 a box to $56 a box. (Todd 2011) Relating to to this issue, the Aussie government can lift the import bar or impose a price ceiling to keep the fruit and veg prices in a socially appropriate level.
An increase in the price and minimize of the variety demanded of food and vegetable were caused by the flood in Australia. Due to the avalanche in Queensland, many food and fruit and vegetables were damaged. It is without doubt that the availability of food and vegetables will decrease.
From diagram (1), in short-term, we all will find that offer curve provides shifted leftward from S1 to S2 as there exists a decrease in source. With the decrease of supply, sense of balance price will certainly goes up by Pe to P2 as well as the equilibrium amount will decrease from Qe to Q2. At this stage, a shortage will be in Q3Qe. Shortage usually occurs when the amount demanded is higher than the quantity supplied at the current price. It will have competition between buyers and they'll eventually offers up the selling price and ends in a new equilibrium. When we have a shortage in the market, black market may are present and holding back on problem may occur.
When there is a technological cutting-edge which can assure the brought in pumpkins are as good as household qualities and they are allowed to be imported in Australia, it will eventually definitely increase the supply and improve the lack problem in temporary.
By diagram (2ai), with the improvement of the technology as well as the raising of import ban, the provision has increased and the supply contour has switch to the proper. A new source curve S1 has been formed. With the new supply shape, it is clear that balance point will change from elizabeth to e'. The equilibrium price will decline via Pe to P2 as well as the equilibrium amount will grow from Q1 to Q3. Furthermore, the situation of lack in pumpkin market will probably be improved. Since there was an increase in supply, the new shortage will be Q3Q2 as shown inside the diagram (2ai). It was a large improvement when comparing with the first one which is usually Q1Q2. Therefore , with the improvement of the technology, it is properly reduce the area of the original shortage which is P1Q1Q3.
Relating to to the improvement of the technology, it will basically also affect the domestic pumpkin market. Import pumpkins are considered as household pumpkin's replace goods. When the new technology cutting-edge ensures the import pumpkin can have a high-quality, consumer's with regard to import pumpkin might increase. The increase widely used for transfer pumpkin will surely affect the demand of its substitute which is domestic pumpkin.
Consider diagram (2aii), consumer's with regard to domestic pumpkin will lower when importance pumpkin can easily have the same quality as home pumpkin. The demand curve will certainly shift leftward to D1. Equilibrium selling price will fall season from P1 to P2 and the balance quantity is going to decline via Q1 to Q2. Finally, the household pumpkin farmer may suffer damage in total income which is P1Q1-P2Q2 as the equilibrium stage has been shifted from at the to e'.
In the other method, when consumers are uncertain regarding the quality of imported pumpkins, it will definitely affect customer's demand for pumpkin soup. Pumpkin is the most important element as well as recycleables in making the pumpkin soup. When customer is almost confident with import pumpkin, they could also will not likely confident to people pumpkin soups which were made by import pumpkin. So , the necessity for pumpkin soup may possibly decrease.
Since shown in diagram (2b), the demand intended for pumpkin soup was reduce and the require curve offers shift...