Questions 1 - Market Structures Healthsville is a regional town in Australia where a large number of small farmers from nearby areas sell their produce in small shops and markets. Many of these farmers keep bees, and organic raw honey is a popular product in Healthsville. People living in and around the town, as well as people travelling a long distance to buy healthy fresh produce, visit the town to buy honey and other produce. a. According to given information, the market for honey in Healthsville is competitive. Do you agree? Explain using at least three characteristics of the competitive market. Hint: You can agree or disagree with the statement but you must give reason for your answer using economic theory. (3 marks) b. In recent month there has been wide publicity about the health benefits of organic raw honey. Following this favorable publicity, the demand for Healthsville. Draw a diagram to illustrate the impact of increased demand for honey on (4 marks) 1. Market for honey in Healthsville, and ii. Sweet As Honey, a representative firm selling honey in Healthsville c. Discuss the short-run changes in the honey market and the firm as a result of recent favorable publicity to their products. Your discussion should include changes in the following: (4 marks) 1. Price and quantity of the honey market in Healthsville ii. Price, quantity and costs of Sweet As Honey, and iii. Profit maximization and profits of Sweet As Honey Hint: Long-run change back to equilibrium is not required d. Following the increased publicity and profits of the Healthsville honey market, a alrge firm from Melbourne decided to take-over all small firms in Healthsville and operate the business as the sole supplier of organic raw honey in the region. Write a paragraph to explain the changes in the Healthsville honey market before and after the take-over by the city firm Hint: Your answer should discuss price, output and deadweight ioss before and after the take-over (4 marks)