Economies of New Zealand

Running head: ECONOMIC ENVIRONMENT
Economic Environment
Name of the Student
Name of the University
Author Note

1ECONOMIES OF NEW ZEALAND
Table of Contents
Part 1..........................................................................................................................................2
Answer to Question 1.............................................................................................................2
Answer to Question 2.............................................................................................................2
Answer 2.1.........................................................................................................................2
Answer 2.2.........................................................................................................................4
Answer to Question 3.............................................................................................................5
Answer 3.1.........................................................................................................................5
Answer 3.2.........................................................................................................................5
Answer to question 4..............................................................................................................6
Answer to 4.1.....................................................................................................................6
Answer to 4.2.....................................................................................................................7
Part 2..........................................................................................................................................7
Answer to Question 1.............................................................................................................7
Answer to a........................................................................................................................7
Answer to b........................................................................................................................7
Answer to c........................................................................................................................7
Answer to d........................................................................................................................8
Answer to question 2..............................................................................................................8
Answer to a........................................................................................................................8
Answer to b........................................................................................................................8
Answer to c........................................................................................................................9
Answer to question 3..............................................................................................................9
Answer to a........................................................................................................................9
Answer to b........................................................................................................................9
Answer to c........................................................................................................................9
Answer to d......................................................................................................................10
Answer to question 4............................................................................................................11
Answer to a......................................................................................................................11
Answer to b......................................................................................................................12
References................................................................................................................................13

2ECONOMIES OF NEW ZEALAND

3ECONOMIES OF NEW ZEALAND
Part 1
Answer to Question 1
The price (P) of the dairy products in New Zealand increased in the first half of 2013
because of fall in supply caused due to drought. In the latter half of the year supply rose but
price did not fall due to rise is Chinese demand. The effect can be seen in the figure below.
Figure 1: Effect of drought and Chinese demand
Source: (Created by the Author)
In Figure 1, during drought supply of milk fell from Q1 to Q2 given same demand at
D1, thus price rose from P1 to P2 (Kamber, McDonald & Price, 2013). As the industry
rebound and production recovered, supply curve shifted back to S1form S2. However, it is
seen that price is at P3, which is close to previous high price P2. The reason behind this high
price is due increased Chinese demand that pushes demand curve rightward from D1 to D2.
Q3
P3
S2
S1
D1
D2
P2
Q2 Q1
P1
Price
Quantity of milkO