Read the following excerpts from the article Fruit, veg costs surge by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions 1, 2 and 3. (please see this article below and also attached)

This assessment is designed to test your understanding, application and communication of economic theory. You will be given a newspaper article to read, and you will be required to answer economic questions based on this reading. Detailed information including the article can be found below.
You are expected to use graphs to explain your answer. It will be important to write within the words limit outlined for the assignment

Assume that the Australian government wishes to keep fruit and vegetable prices from rising to a socially unacceptable level. There are two options being considered: lift the import ban or impose a price ceiling.

You are expected to write an essay exploring the major issues raised in the article.

In particular, you need to address the following issues:

1. Use the demand and supply model to show the likely short-term impact of the flood on the price and quantity of fruit and vegetables in Australia. (5 marks)

a) If a technological breakthrough ensures imported pumpkins are as good as domestic qualities and are thus allowed to be imported into Australia, use the demand and supply model to explain the short-term impact on the pumpkin market. (4 marks)

b) However, if consumers are uncertain regarding the quality of imported pumpkins, use the demand and supply analysis to explain the impact on the pumpkin soup market in the restaurant industry. (4 marks)

3. Referring to the determinants of price elasticity of demand as they apply to pineapples analyse the likely impact on the market if the government imposes a retail price ceiling of $40 a box on pineapples. Specify any assumptions you have made. (8 marks)

Your assignment will also be assessed on how effectively you can communicate with the reader, i.e. how well you have presented your arguments and ensuring your analysis is logical and consistent. 4 marks will be awarded on writing including, grammar referencing and formatting. Importantly, make sure you use appropriate diagrams in your analysis. For more information on essay writing, refer to the Learning and Teaching website: ( ).

Fruit, veg costs surge

Todd Dagwell The Herald, 25th January, 2011

Popular salads and fresh fruit juices are being scratched off menus as small business owners struggle with the rising cost of fruit and vegetables caused by the Queensland flood crisis.

Sumo Salad Charlestown Square and Westfield Kotara owner Paul Phelan said he had been forced to substitute ingredients in some popular salads because of supply problems.

He said Cos lettuce and pumpkin were extremely difficult to find, and the available produce was terrible quality and expensive.

“Pumpkin has tripled from $1.50 to $6 a kilo and the quality is really bad,” Mr Phelan said.


Thurst Burst Marketown owner Neville Winter said finding quality fruit at an affordable price had been the biggest problem since the flood crisis began.

Pineapple and oranges, two of the most popular ingredients in fresh fruit juices, had doubled in price.

“Pineapple use to be $28 a box and the other day it was $56 a box, while oranges have doubled,” Mr Winter said.

“All other boxes of fruit have gone up by at least $10 a box.”

A spokesman for Boost Juice Charlestown said the shop was considering buying a large amount of produce and freezing it before the supply situation became any worse.

All three businesses expect the problem to worsen in coming months. surge/2056289.aspx

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