There has been a notable change in the avocado market. Historically peak demand had been around events such as the Super Bowl and Cinco de Mayo. But with more and more people eating avocado toast for brunch on weekends, consumption increased at other times of the year.

This has led to considerably higher prices. In May 2021, the price of a carton of Haas avocadoes was $40. One year later the price had climbed to $78.75. Avocado consumption per person increased over this same period.

a) Explain using basic supply and demand analysis from the first week of the course why avocado prices went up.

b) How will avocado producers react to the higher prices in the short run?

c) What might we expect to happen to the price and consumption of avocados in the long run (2025 perhaps)?