The 2019/20 Australia Bushfires affected food production nearly in New South Wales, Queensland and Victoria that are regarded as the food basket for Australia. Assume that before, the bushfire, in...


The 2019/20 Australia Bushfires affected food production nearly in New South Wales, Queensland and Victoria that are regarded as the food basket for Australia. Assume that before, the bushfire, in 2017/18  Australia produced 80,000 metric tons. Also, assuime that after the bushfire devastation in 2019/20 Australia produced 50,000 metric tons of rice. Finally, assume that during the same period 2017/18 and 2019/20 the price rice in Australia rose from AUD 1.75 per kg to AUD 3.00 per kg respectively.  Use the Demand and Supply Model below to answer the questions that follow.


*Picture attached.





1.Use the Demand and Supply Model above to explain the impact of the bushfires on the rice market in New South Wales.


2.Use the mid-point approach to calculate the price elasticity of demand for rice in Australia.


3.What is the price elasticity of demand for rice? Based on your answer, is rice a necessity commodity? Explain your answer.


Price /kg<br>S1<br>E1<br>3.00<br>SSo<br>Eo<br>1.75<br>DD<br>50,000 80,000<br>Quantity (Metric Tons)<br>

Extracted text: Price /kg S1 E1 3.00 SSo Eo 1.75 DD 50,000 80,000 Quantity (Metric Tons)

Jun 11, 2022
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