ATMC BUS502 Principles of Economics for Accountants - Assessment Task 2

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ATMC BUS502 Principles of Economics for Accountants
Assessment Task 2 – Responses to articles
Article 3: DUE via Safe Assign 6pm Sunday 2ndJune
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 Fuel price increase impact on the fresh food marker
It is evident from the graph above that rising fuel costs would contribute to
the production cost rise as fuel costs tend to impact the various raw
material costs coupled with logistics related costs as the produce needs to
be transported from one place to other. The net result is that supply curve
would move upwards which is reflected in the above graph. The short run
demand curve does not alter as highlighted in the graph above. Owing to
the supply curve shifting, the equilibrium point would undergo a change.
The price corresponding to the new equilibrium point is P1 which is higher
than P* which was the equilibrium price to begin with. Further, there has
been a reduction in the equilibrium quantity from Q* to Q1.