Please follow the lecture to do the work :) There is also an example please help me follow it :)
ECON1008: PRINCIPLES OF ECONOMICS Assignment 1 (Qs 1 and 2) Due: 12noon Thursday March 30 Name: Le Phuong Thanh(Lucy) ID Student: 511916 QUESTION 1: Based on the title of the article “Avocado prices hit record highs with increased demand and scarce supply”, we can see that demand of avocado has upward trend while the supply of avocado has a downward trend. As we all know, the change in demand and supply will cause the curve to shift due to non-price factors (price did not change). According to the article, we will see determinants of demand such as preference, the number of buyers while determinants of supply are a number of sellers and weather. (Parkin & Bade n.d.) Firstly, causes of growing demand for avocados are the benefit of avocado for people's health. Avocado is a healthy fruit which is a popular product in supermarket trolleys so, people are becoming more aware of avocado properties (Non-price factor). The demand of avocado is rising significantly every year and it is likely to continue to grow through marketing and healthy campaign (Lara Wester, 2016). Secondly, a reason for decreasing supply of avocados is because of failure harvest process. Supply from West Australia and New Zealand drop to 30% because of weather and Christmas (Non- Price factor) period which influence on avocado's harvest process (Lara Wester, 2016). Diagrams: It can be clearly seen from diagrams above that there are 3 difference cases when supply decrease and demand increase at the same time. An increase in demand will shift the curve to the right while the decrease in supply will shift the curve to the left (Opposite direction). In both 3 cases, the new equilibrium point occurs at the higher price point and the quantity is indeterminate which might no change, increase or decrease. (Parkin & Bade, n.d.). That is the reason why the price will increase due to the equilibrating process. QUESTION 2: Based on the article, the avocado supply can be support by more avocado orchard which is being set up (Lara Wester, 2016). The supply of avocado is expected to increase significantly over the next few years through marketing campaign (number of seller factor). In addition, the demand for avocados continues to increase as it can be used in the variety of foods (preference factor). Especially, avocado is considered to be unique fruit that no fruit can replace them (number of buyer factor). Therefore, both demand and supply will increase because of these determinants above. Diagram: As we can see from the diagram, the diagram shows the change in both demand and supply (same direction). An increase in demand will shift the curve to the right and an increase in supply will shift the curve to the left. The equilibrium equity will always rise but the equilibrium price can increase or decrease which is depend on the change level between supply and demand. In short, the market price can increase or decrease in the future due to the increase in both demand and supply. But if it increases, it can happen oversupply problem. REFERENCES: 1. Parkin, M & Bade, R n.d., Microeconomics, 1st edn, pp. 85-107 2. QLD Country Hour, 2016, “Avocado prices hit record highs with increased demand and scarce supply”, viewed 20 January 2016,
. 1