Assessment Task 2- Case study’ Critical response
A few weeks ago the editor in chief of a regional newspaper offered you the opportunity to write weekly columns on the economic consequences of natural disasters, such as cyclones, for Saturday editions. since then you have been actively analysing different aspects of the economic impacts of such events using you knowledge in economics. As a Bachelor of Business degree graduate (majoring in Economics) you know that agricultural farms arc not only important elements in the regional food supply network but also a vital tool in economic development. You also learned that farmers can choose to be either diversified or specialised in their farming practices and that modem agricultural units in developed countries arc highly mechanised. In your research you also came across some statistics that shows in advanced countries traditional family farms arc being replaced by larger production units, however, in less developed economics, small farms arc still a vital supply source in the local and
regional markets. Last Saturday you published a column about the production cost of banana farms in the region, in your article you also indicated that agriculture is essentially a commodity business although the cost structure of farms is characterised relatively different from many manufacturing and non-farm businesses. A few days after publication of your column you received an email from the secretary oldie Economic Society of Australia — QLI) branch congratulating you on your last influential article and inviting you to be a keynote speaker in the near future event called Young Economist Speaker, a conference to be held in Brisbane. You arc quite excited about this opportunity and accept the invitation. You find out that the Young Economist Speaker series this year focuses on the cost and
market structure in the agricultural industry. The conference secretariat informs you that the organisers in particular are interested in the following topic areas: a) Banana prices in QED, h) Green tea market in China. To make discussions more narrowly focused the conference secretariat sends you a little background information and a series of targeted questions for each of the topics and requests )t-1u to
provide a critical re% icw when addressing both sets of questions.
Topic a) Banana prices in QLD
Price data shows that Banana prices were steady between years 2009-20 11, and then increased from about $2-$3 per kilo to $13-$16 dollars per kilo after February 2011.
1- What movements in in supply and demand would be consistent with the
changes in Banana prices? Discuss the factors and mechanisms that have
causes these patterns of price change. Use Demand and Supply diagrams
when needed.
2- Suppose that in Queensland between 2006- 2009 the prices of Bananas
increased, and then between 2011- 2013 quantity of Banana sold decreased. Could it be possible that the demand for the banana decreased between years 2006 and 2009 and again between 2011 and 2013? Explain your answer.
Hint: while preparing you answer you also come across a coup_l_e iewspapre articles on the impact of cyclone Yasi on banana prices (see articles in the appendix)
Topic b) Green Tea market in China
An article in The Economist (2015) described how the price of Longjing Green Tea in Hangzhou Zhejiang in China had increased 30-fold between January to April 2014. The article noted that, due to low prices for this particular tea in the previous years, the amount of land set aside for growing the tea in Hangzhou, Zhejiang in the current season had been halved. As well, some scientific research indicated that this particular green tea is an effective antidote to the swine flu that had been spread out in some regions in China
1- Explain why the price Longjing Green Tea has increased.
2- Discuss what is likely to have happened to the quantity of tea produced. Use
D-S diagrams where required to illustrate your answer.
