Avocado Microeconomics

890 Words2 Pages

Avocado Supply & Demand 2016
Research and Critical Review

Economic events are largely governed by the interaction of supply and demand. The law of supply states that with ‘all else being equal’ (ceteris paribus), as market price of a good or service increases/decreases so will an increase/decrease in quantity supplied. In turn, the law of demand states as market price of a good or service increases/decreases ceteris paribus, the quantity demanded will increase/decrease accordingly. The Australian avocado industry is an indicative example of microeconomics - the study of individual consumer or business decision making and spending behaviour in relation to the allocation of a limited resource and the correlation of supply and demand in determining …show more content…

These claims were refuted by the chief executive of Avocados Australia, John Tyas and Western Australian Avocado Growers Association chairman, Wayne Francheschi. Both industry representatives maintained that the shortage was simply the result of bad growing conditions which affected crop yields. However, in a later article by Han, it was the original claimant of industry market manipulation, Anthony Allen who was criticised for the attempt to force market price higher, not the producers. Allen’s response was that the market should establish the price and was only his duty to ensure growers were fairly compensated. "I never tell the market what they have to pay, as the market always determines price. My question is, 'What can you pay?' and then that is the price setting from the market," (The Land …show more content…

This highlights that a core principal of economics is the decisions and choices to be made in order to manage limited resources. Furthermore, that microeconomics pertains to the behaviours that affect these decisions and choices made at an individual level. As demonstrated by the avocado industry recently, motives and variable factors for increases/decreases in supply and demand will not always be transparent to the consumer. Therefore, to have an understanding of the concepts of microeconomics and the market can elucidate the individual consumer’s decision making rationale rather than making

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