Detailed Economic Analysis of the Australian Avocado Market

This report provides an in-depth economic analysis of the avocado market, focusing on the Australian context. It begins by establishing the fundamental economic principles of supply and demand, and equilibrium, then applies these concepts to the avocado market. The report examines the impact of changes in global demand, particularly in the US and China, and analyzes how these shifts affect the market. It also explores the effects of supply shortages in key avocado-producing regions, such as California, Mexico, and Peru, and how these factors influence prices. The analysis highlights the price stability in the Australian avocado market, attributing it to steady supply from Queensland and New Zealand. The report concludes with a summary of the key findings, emphasizing the interplay of demand, supply, and equilibrium in shaping the avocado market dynamics.

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

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

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

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

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

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

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

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

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

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.

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

Reference list
Cowen, T., & Tabarrok, A. (2015). Modern Principles of Microeconomics. Palgrave Macmillan.
Fine, B. (2016). Microeconomics. University of Chicago Press Economics Books.