Your tasks for Part 2 are as follows: Consider the market for avocadoes in Australia. To give you some relevant knowledge and guidance

for this task, read the following news articles (listed in chronological order):

https://www.abc.net.au/news/rural/2016-01-20/australian-avocado-prices-hit-record-highs/7099046

https://avocado.org.au/wp-content/uploads/2021/10/2020-21_AAL-Facts-at-a-glance3.pdf

https://www.rabobank.com.au/media-releases/2022/220725-an-avo-lanche-of-avocados-australia-needs-to-consume-and-export-more-avocados/

Some relevant data can be obtained from 'Infocado Reports' from the Avocados Australia website, e.g., see:

https://avocado.org.au/our-programs/supply-chain-data/retail-pricing/

(Part A)

Provide an explanation and economic reason for each of the following questions:

(i)Do you think the current supply of avocados is relatively price inelastic or elastic?

(ii)Do you think the current demand for avocados is relatively price inelastic or elastic?

(iii)From your answer in (ii), what therefore would be the price elasticity of demand for

avocados when the price of an avocado rises by 50 percent?

[Maximum 300 words for Part 2a]

4 marks for quality of analysis + 1 mark for equation = Total of 5 marks for Part 2a

(Part B)

Use the demand and supply (D&S) model to demonstrate the change in the market conditions from 2016/2017 to 2021/2022 for avocados in Australia. To prepare for this task, you will do the following: draw a set of D&S curves on the one diagram, carefully labelling the curves and clearly indicate the original (2016/2017) and new (2021/2022) set of equilibrium prices and quantities; and provide economic reasons for the shift(s) in the curves. (Draw the diagram)

HINT: A sound answer would use values based on actual data on prices and quantities of avocados. Briefly discuss {no need to draw} what you expect the Australian avocado market to look like in terms of average prices and quantitiesin 2025 compared to 2021/2022.

[Maximum 500 words for Part 2b]

5 marks for diagram + 4 marks for quality of D&S analysis + 1 mark for D&S discussion = Total of 10 marks for Part 2b