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Read the article written by Tina Morrison “NZ avocado industry warned to brace for lower process as key Aussie market swamped”
www.stuff.co.nz/business/129202025/nz-avocado-industry-warned-to-brace- for-lower-prices-as-key-aussie-market-swamped
(A copy ofthe article is reproduced below.)
Task:
1. Using demand and supply model, explain and illustrate what is
happening in the avocado market as described in the article. Your
answer needs to clearly explain the impact on market equilibrium price and quantity of avocados
2. Explain, and illustrate with an economic model, the type of pricing policy the government can take to protect consumers and/or protect growers.
3. Assume avocados are sold in a perfectly competitive market. Explain, and illustrate graphically, how the effect of the change in market
conditions (as described in the article), will affect an avocado grower that is currently making zero economic profit. (Hint: your answer
should include graphs for both market as well as individual firm/farmer.)
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