Question 1:

Using demand and supply diagram, explain why price of bananas is expected to rise. Your answer needs to clearly include the equilibrating process.

Question 2:

a. 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)

b. Based on the short run position identified in Q2 (a) explain and illustrate graphically effect of

entry/exit on the long run position of the firm.

(Hint: your answer should include graphs for both market as well as individual firm.)

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