Economic Analysis: Impact of Increased Supply on Avocado Prices in AU

This report analyzes the dynamics of the avocado market in Australia, focusing on the interplay between supply and demand and its impact on price fluctuations. It examines the recent drop in avocado prices, attributing it to a significant increase in domestic avocado production. The report applies the law of supply and demand to explain how increased supply leads to lower prices, benefiting consumers but potentially harming growers. It also considers the impact of external factors such as the pandemic-related lockdowns on consumer behavior and demand patterns. The analysis includes a graphical representation of the supply and demand model, illustrating how price decreases lead to increased demand. The report concludes with a discussion of potential future market trends and the importance of understanding consumer preferences and market conditions for effective decision-making. Desklib offers a variety of solved assignments and resources for students.

Avocados are dropping in price

Table of Contents
MAIN BODY..................................................................................................................................3
REFRENCES...................................................................................................................................6

MAIN BODY
Demand and supply plays a crucial role because when people demand for a particular product
and supply is done properly then it becomes easy to sell product to customers. Models ca be used
for analysing demand and supply in market for avocados in Australia. It is important to analyse
market situation so that products can be made accordingly and there will be no confusion.
According to law of demand when prices are high of a product then customers demand less for
that product. According to law of supply, when prices are high then suppliers supply more
products so that they can earn more profit (Caro, Alessandrini, Sporchia and Borghesi, 2021). It
is important to apply this model because it helps in making plans or strategies better than others.
There was decline in prices of Avocados because suppliers think that if prices are kept low then
more people will buy the product and it helps in attracting many customers. This is a best way to
attract people and satisfy their needs by providing them good quality products at low prices.
Demand and supply model
Price
Quantity
From the article, it has been noticed that there is recent fall in prices of avocados and price was
$1 in supermarkets. This is a strategy which is applied by suppliers so that more customers can
be attracted and this increases sales of product. According to law of demand and supply, when
prices are low then people demand more for product and when prices are high suppliers supply
more products so that revenue can be generated. In the article it was mentioned that this year
Supply
D

more avocados are harvested and it is good news for customers because they will get more
avocados at low price. The main reason behind decrease in price is to increase sales of avocados
and more people can enjoy it. This season avocado had biggest crop but demand is not getting
match with the supply of product (Motaung, 2019).
There are some reasons why demand is not matching with supply because during lockdown
people stop buying things from outside and all restaurants were closed. People are preferring to
eat at home and this is also a reason why supply is not getting match with demand. So, for
analysing demand it is important to apply model and better plans can be made for accomplishing
targets. In Australia prices fall of avocados because of pandemic and lockdown people are not
buying things from outside and to increase sales of avocados. This also help in attracting more
people and good quality products can be provided to customers at low price. It has impact on
demand and supply because it is an economic principle that when supply of goods is increasing
then demand falls and when demand is increasing then prices are high. There is inverse
relationship between supply and price of products (Robson, Rahman and Muir, 2017).
During pandemic people are not purchasing things from outside and they eat at home, this is the
reason behind decreasing demand of avocados. To increase demand of avocados prices are
reduced so that people get attracted and purchase it. Demand includes taste and preference of
customers, price of related goods, population. It is important to identify choice of customers so
that their needs can be satisfied and it helps in achieving targets. The impact on price and
quantity will be that people demand for more avocados because prices are less and people can
buy it. The outcome may change in long run as taste and preference of customers can change and
due to lockdown people will not purchase.

Price decreases then demand increases
It is also possible that sales may increase and people demand for more product. This is a strategy
which is used by suppliers to increase sales and more revenue can be generated. For
accomplishing goals and objectives, it is essential to increase price and better products should be
provided to customers. In Australia, people are still passionate about avocados and they will buy
if it is available at low prices. In future may be demand for avocados increases and there may be
rise in price. So, it is important to analyse market situation before taking any step and provide
good quality products to customers. Prediction may be change as it depends upon market
situation and choice of customers. It is essential to make plans or strategies so that sales can be
increased and more revenue can be generated. So, prediction can be done for future but there is
no guarantee what will happen in future.
Q1
Q2
D1
P2P1

REFRENCES
Books and Journals
Caro, D., Alessandrini, A., Sporchia, F. and Borghesi, S., 2021. Global virtual water trade of
avocado. Journal of Cleaner Production. 285. p.124917.
Motaung, N., 2019. Avocado extracts market overview. FarmBiz. 5(3). pp.44-44.
Robson, A., Rahman, M.M. and Muir, J., 2017. Using worldview satellite imagery to map yield
in avocado (Persea americana): A case study in Bundaberg, Australia. Remote
Sensing. 9(12). p.1223.