ATMC BUS502 Principles of Economics for Accountants

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ATMC BUS502 Principles of Economics for Accountants
Assessment Task 2 – Responses to articles
Article 3:
Full Name:
Student number:
Tutor’s name:
Article Title:
“High petrol prices may push up the cost of fresh food for consumers”by Nikolai
Beilharzfrom ABC News from 18th October 2018. Available at:
https://www.abc.net.au/news/rural/2018-10-18/rising-petrol-prices-may-push-up-the-cost-of-
fresh-food/10390286
Instructions:
Access the article at the URL given above and read it carefully. Answer the questions and
complete the diagrams in the spaces provided below. Use full sentences. If you use any
references, please list at least the URL of your source. Possible total for this assessment task is
15 marks.

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Question 1
The diagrams below show the market for fresh food. Illustrate and explain what happens to
the equilibrium price and quantity in the following scenarios.
(a) According to the article “a rise in the petrol and diesel prices could also lead to a rise
in the price of fresh foods”.Use the supply and demand diagram below to illustrate and
explain why.
Figure 1.1 Impact of rising fuel prices
The fuel costs increase would lead to higher production costs for the producers owing to
higher raw material prices coupled with rising transportation costs. The result is that the
supply curve would show an upward shift which is exhibited above. There would not be any
change in the demand curve over the short run. This supply curve shift would lead to
equilibrium point change. From the graph, it is clearly evident that the new equilibrium price
defined as P1 tends to be higher than the initial equilibrium price defined as P*. The
equilibrium shift also leads to the new quantity defined as Q1 to be lower than the earlier
equilibrium quantity defined as Q*.