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While Tropical Cyclone Niran didn't actually touch down in Australia, remaining hundreds of kilometres off the Queensland coast, the weather system associated with it struck hard last week. Communities along the coast between Cape Melville and Innisfail saw wind gusts of around 100km per hour with areas including Cooktown, Port Douglas, and Cairns feeling the full impact. It is believed close to half of the 11,000 hectares of banana crops around North Queensland were damaged and the clean-up could take anywhere up to 12 months. While prices at major supermarkets including Coles and Woolworths haven't yet been affected by the damage, this is expected to change in coming weeks. https://www.9news.com.auational/banana-prices-expected-to-jump-after-tropical-cyclone- niran-damages-queensland-crops/fec4a9a3-45e0-41af-8bbb-75d53714dd47Banana prices expected to jump after Tropical Cyclone Niran damage W 8:13pm Mar 6, 2021 The price of bananas is expected to jump temporarily after Tropical Cyclone Niran caused an estimated $180 million in damage to Far North Queensland's crops. Queensland is responsible for approximately 94 per cent of Australia's banana production, the majority of which is grown in Far North Queensland. Economists and limit sellers are forecasting a rise in the price of of the popular 'uit after the wild greather levelled almost a third of the country's crops. Queensland is responsible for the majority of Australia's banana crops. [iStock] "Shoppers should expect to see maybe 50c to $1 a kilo going up in price in the next coming weeks or months,\" consumer expert Gary Mortimer told 9News. The Australian Banana Growers Association says other growers will pick up the slack for those impacted by the cyclone and the small price hike is only temporary, with shoppers encouraged to continue supporting the industry. "Remember, 50c to $1 isn't a big hit when you consider what these farmers are facing, continue to support them, and buy up big," Mr Mortimer said. After Tropical Cyclone Larry and Tropical Cyclone Yasi did signicant damage to crops in 2006 and 2011 respectively, the price per kilo jumped by $2. Assume bananas are sold in a perfectly competitive market and firms are making zero economic profit. Explain and illustrate graphically, the effect of an increase in market price on the short run position of a single firm selling bananas. (Hint: Make sure your graph includes the firm's demand curve, marginal revenue curve, marginal cost curve and average total cost curve and also explain the profit maximising position of a firm). - Explain perfect competitive market. - Start the diagram with the firm at breakeven (P=ATC) and provide explanation for the diagram explain how firm determines price and profit maximising output. - Clearly label the diagram (D, MR, MC, ATC, Q, P) - Analyse and explain how the decrease in price will affect the firm - Illustrate and describe the change on the diagram. - Which curve(s) will be affected by this change? Check the labelling again. - How will this impact price, output and profit/loss (shade the area) of the firm (you can support with numerical example) - Analyse and explain how the increase in price Price/cost (S) will affect the firm - Illustrate and describe the change on the diagram. - Which curve(s) will be affected by this change? Check the labelling again. - How will this impact price, output and profit/loss (shade the area) of the firm (you can support with numerical example) Based on the short run position identified in 02 (a) explain and illustrate graphically effect of entry/exit on the long run position of the firm. [4 marks] graphs for both market as well as individual firm Start diagram with market/industry at equilibrium and firm '3 diagram same with 032(a). Explain what will happen now due to the firm's situation (profit or loss) as seen in OS 2(a). Remember to explain the impact on the market and on the firm. What is the outcome in the long run for both the market and the firm. Refer to lectures Week 6 and tutorial Week 7 DaSb'U'Url'me'Sllurt run position identified in Q2 (a) 'expiain-and-iustrate-gra'plcafly-effect of entry O_R exit on the long run position of the firm. (Hint: your answer should include graphs for both market as well as individual firm.) [5 marks] Price (5) Price/cost (3) Market diagram Firm's diagram - Start diagram as above (with price - Start with what you had from 03 already increased). 2(a) (profit or loss)