a. Assuming tomatoes are sold in a purely competitive market, discuss other major factors contributing to increase price of tomatoes in Australia. In your answer, include appropriately labelled demand and supply curves to explain the process of moving to the new equilibrium output and price.
10 marks
b. Explain the concept of the demand elasticity. Using appropriately labelled demand and supply curves, discuss the price elasticity of demand for tomatoes.
10 marks
c. Based on your answer in part b, illustrate hypothetically, what should be the effect of the rising price of tomatoes on the total revenue of the tomatoes wholesale market.
10 marks
d. Considering the fact that many tomato farmers could abandon the industry, explain, the different strategies that government should adopt to sustain the long-term supply of tomatoes. Use graphs to support your answer. Discuss the advantages and disadvantages of the strategies you have mentioned.
10 marks
