ECON2002 Principles Of Economics

ASSESSMENT BRIEF
Subject Code and TitleECON2002 Principles of Economics
AssessmentAssessment 6 -­? Capstone project
Individual/GroupIndividual
Learning Outcomes1.  To understand and explain basic economic
principles
2.  To apply economic principles to solving economic
problems
SubmissionBy 11:55pm AEST/AEDT Sunday of Week 12
Weighting30%
Total Marks100 marks

Instructions:

Answer all parts of the question.

  1. Each part is worth 25 marks.
  1. Half of the marks for each question will be allocated on the basis of diagrams and the other half on the basis of your explanation.
  1. Submit your work in Word format on Blackboard.

World goes nuts for Aussie Almonds The Australian

Robert Foster

28 August 2015

ECON2002 Principles Of Economics

Foreign investors are circling Australia’s growing almond industry as a global shortage drives up prices.

Australian almonds have become more appealing as drought ravages California, which produces about 80 per cent of the world’s almonds. As a consequence, Californian production has fallen by about 10 per cent and it may take years for Californian production to return to normal levels.

ECON2002 Principles Of EconomicsIn response, almond prices have risen to a nine-year high of about $US3.45 ($3.70) a pound (about $8.40 US per kilogram).

That has seen the Australian almond industry grow massively. It now accounts for about 7 per cent of global supply and has pipped Spain as the world’s second largest producer.

In the past year the Australian crop has risen by almost 50 per cent to 73,361 tonnes and the value of exports has more than doubled to $370 million, according to official data.

”World demand has gone up by about the size of the Australian industry every year for the past 10 years,” Mr Skinner said. World demand is being driven by the emergence of new markets in India and China. It is also being driven by the acknowledgement of the nutritional value of almonds, they are gluten free so they can be used as a substitute for wheat flour in baking, they are 21 per cent protein so they are finding their way into high protein breakfast cereals and other high protein foods plus they can be used to make almond milk, which is a substitute for cow’s milk and is replacing soy milk.

Almonds are Australia’s most lucrative horticulture crop, overtaking citrus and table grapes last year when it became the first to earn more than $300 million in exports, mostly to India and the Middle East.

  1. Assuming that the global almond market is perfectly competitive, explain the impact of the drought in California on the Australian almond industry and a typical Australian almond farmer in the short-run. Illustrate with appropriate diagrams. (25 marks)
  1. Assuming that the global almond market is perfectly competitive, explain the impact of the drought in California on the Australian almond industry and a typical Australian almond farmer in the long-run. Illustrate with appropriate diagrams. (25 marks)
  1. Using the Aggregate Expenditure model and its related diagram, explain the impact on the Australian economy of the doubling of the value of Australian exports of almonds in the last year. (25 marks)
  1. Using the AS/AD model and its related diagram, explain the impact on the Australian economy of the doubling of the value of Australian exports of almonds in the last year.