Assignment 2: Applied
Writing
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Requirement:
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Answer the questions relating to a newspaper article
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Word limit:
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1250 words
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INSTRUCTIONS:
Read the following excerpts
from the article “Bumper Crop means
cheap mangoes” by Nathan Dyer published on November 1st 2011 and
answer all the questions. You are
expected to use graphs to explain your answer.
Bumper crop means cheap mangoes
NATHAN DYER,The West AustralianNovember 1, 2011
Perth consumers are set for a mango boom with
a bumper Ord Valley crop driving down prices for the tropical fruit.
Kununurra packing shed operator Quentin
Parker said a favourable growing season meant Kimberley mango farms were flush
with fruit.
"I've got one customer who did 4000
trays last year and he'll do 27,000 this year," he said.
Mr Parker said his packing shed was sending
about two semi- trailers of mangoes to Perth each day and had packed 80,000
trays with about 40,000 more to go.
He estimated the Ord Valley would produce
more than 200,000 trays this year.
Tony Tonich, fruit sales manager for Perth
market agent AllStates, said the bumper Ord crop and strong supplies from the
Northern Territory were good news for consumers.
"At the moment there's a huge volume of
mangoes on the market," MrTonich said.
"So the consumer in the shop should be
getting a reasonable price. They're advertising this week at around two for $5,
which is a very good price."
MrTonich said mangoes were trading between
$18 a tray for second-grade fruit and up to $35 a tray for top quality fruit.
But he said prices were unlikely to go much
lower because farmers would stop making money.
"If they're not getting $18 a tray and
over, they'll just stop picking."He said people should enjoy the fruit
while the price was low.
Ord Valley picking finishes in about three weeks.
The harvest in Carnarvon begins next month.
Questions:
1.
Assuming that mangoes operate
in a perfectly competitive market, use a well-labeled demand and supply model
to explain how market equilibrium price and output of mangoes is being
determined. Then using the same model, explain and illustrate what factor(s)
has caused the price of mangoes to fall in price.
2.
a.
Do you think the demand for mangoes
is price elastic or price inelastic? Explain your answer based on the
determinants of price elasticity of demand.
b.
Based on the elasticity
established in your answer above, discuss the likely impact of a price fall on
mangoes producers’ total revenue.
3.
Assume the government is
concerned about prices falling too low for farmers and decides to introduce a
price support scheme. With the aid of appropriate diagram show the effect of a
price support scheme on demand and output in the mango market. In your answer
discuss the potential problems associated with such a scheme.
Provide adequate
referencing using Harvard Refrencing.
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