In this assessment report I’m going to uses demands and supply principles to analyse the fruit and vegetable price soured that was caused by the floods. The heavy rainfall and flooding began to threaten Queensland in the early 2011, cyclone called Yasi made the fooling even more badly in north Queensland coast. This heavy rain caused huge direct and indirect economic lost in Queensland. The economic impacts of the cyclone Yasi and flood to the agriculture sector were estimated to be a $1.6 billion loss including crop damage, delays or disruptions of harvests and transport delays (Queensland floods: the economic impacts, 2011). In the first quarter of 2011, the price of fruit went up 14.5% on average, including banana’s price had been doubled. At the same time, vegetable price increased 16% because of the damages to the crops (Australian Bureau of statistics, 2011). DEMAND AND SUPPLY
Demand and supply are the forces of the market economy. It determines the quantity of each product and its price (Mankiw, 2006). There are two groups of people that are involved in the competitive market activities, those people are buyers and sellers. In the case of Queensland’s fruits and vegetables market, many sells and buyers were involved in the market. In this market the fruits and vegetables are not the same prices, but the buyers will around and compare each seller’s price in order to get a good price. Therefore the sellers have limited control on their product’s price, if their price is too expensive, fear buyers are willing to pay for product.
S2 Price ($) S1 Original supply curve P2
0 Q2 Q1...
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