Economic Analysis of Avocado Market in Australia

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Added on  2021/04/21

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The assignment provides a detailed economic analysis of the avocado market in Australia. It examines the impact of changes in global demand and supply on the Australian market, including increased demand from the US and China, and supply shortages in Mexico, Peru, and California. The analysis also discusses price stability in Australia due to ample production in Queensland and export of avocados from New Zealand.

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Economic Assignment
Name of the Student
Name of the University
Author Note

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Introduction
Avocado market in Australia
Cost of avocado remain unchanged
No possibility of supply shortage
Change in global supply and demand
Shortage in avocado supply
California, Mexico and Peru
Increased avocado demand
Consumption increases in China and US
Stable avocado price in Australia
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Relevant Economic Concepts
Equilibrium
Demand and Supply
Demand; willingness of consumers
Supply; goods available in the market (Fine, 2016).
Equilibrium; situation where demand matches with supply
Change in demand; demand curve shifts outward or inward
Caused by factors other than prices (Cowen & Tabarrok, 2015)
Shortage of supply
Sudden fall in supply; supply fell short of demand
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Equilibrium
Avocado; normal good
Demand slopes downward
Inverse relation between price and quantity demanded
Supply curve slopes upward
Direct relation between demand and supply (Fine, 2016).
Equilibrium; demand and supply intersect
Determine price and quantity
Above equilibrium price; excess supply; move down towards equilibrium
Below equilibrium price; excess demand; demand exceed supply; move upwards towards equilibrium

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Equilibrium
Demand curve; DD
Supply Curve; SS
Equilibrium at E
Equilibrium price P0
Equilibrium quantity Q0
At P1 ; Excess supply/demand shortage
At P2 ; Excess demand/ supply shortage
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Change in Global Demand
Per capita Avocado consumption in US increases
Consumption increases to 3.1 kg in 2015
China’s demand increases by 250 percent
Increased consumption increases demand
Demand curve shifts right (Cowen & Tabarrok, 2015)
An upward pressure on price
Australia faces a high demand for avocado from Asia
Price of imported Mexican avocado pulp increases
Demand for Australia’s produce might increase
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Change in Global Demand
An increase in demand
Demand curve shifts rightward to D’D’
Price tend to increase
From P0 to P1
Equilibrium quantity increases
From Q0 to Q1

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Change in Supply
California, Mexico and Peru
Suffers from avocado shortage
Sudden decline in production
Factors except price (Fine, 2016).
California; due to drought
Mexico; strikes among growers
Peru; due to flood
Supply curve shifts left
Push prices up
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Change in Supply
Supply shortage
Inward shift in supply curve
From SS to S’S’
Price moves upward
From P0 to P2
Equilibrium quantity declined
Q0 to Q2
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Price Stability
Increases global demand
supply shortage in different nation
Upward pressure on price
In Australia, avocado price remain stable
Steady supply
Ample production in Queensland and Australia
Export Avocado from New Zealand
Steady supply offset demand side pressure (Cowen, T., & Tabarrok, A. (2015).
Price forecasted to remain around $2.80 to $3.00.

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Conclusion
Australian avocado market
Analysis in light of economic concepts
Basic demand-Supply and Equilibrium
Change in demand
Change in supply
Demand has increased in US and China
Supply shortage in Mexico, Peru and California
Avocado price in Australia remain stable
Smooth supply offset demand side pressure
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Reference list
Cowen, T., & Tabarrok, A. (2015). Modern Principles of Microeconomics. Palgrave Macmillan.
Fine, B. (2016). Microeconomics. University of Chicago Press Economics Books.
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Thank You
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