The aftermath of Cyclone Yasi wiped out 75 percent of Australia's banana production. Prices had shot...

Question

The aftermath of Cyclone Yasi wiped out 75 percent of Australia's banana production. Prices had shot up in the past 10 days since 2^nd
Feb 2011 from $2 per kilogram to as high as $15 per kilogram and anticipated to rise even further
. Consequently, the rising price became an issue as

various lobby groups

demanded the government to allow

bananas to be imported. In

response, the government argued that it was protecting the homegrown crop and doesn't import bananas. It announced soon after the cyclone that import bans wouldn't be relaxed, which was great news for banana growers, but bad news for consumers.
Below are two newspaper articles, which provides comments regarding the impact of cyclone Yasi.

You are the economic advisor to the Australian government and have been designated to analyse before and after impact of Cyclone Yasi on Australia’s banana production. Your task is to write up a critical overview of the banana market in Australia illustrating the before and after impact of Cyclone Yasi (supported by appropriate diagrams) on the economic welfare of both consumers and producers. In addition, you have also been asked to critically evaluate the economic welfare of consumers and producers if the import ban was lifted and illustrate this with appropriate diagrams. You are also expected to provide at least two recommendations (independent of the ban) and support these recommendations with evidence drawn from appropriate studies (e.g. journal articles, academic working papers).

While it is relevant to consider social and normative issues, your essay should focus on economic analysis and should address such aspects as consumer and producer welfare, efficiency, functions of market and government intervention
amongst other things.
In preparing for this essay you should read as widely as possible. As a first step you should read Chapters 1 to 9 of the prescribed text to get a good understanding of the relevant economic theories. Note also that although this is primarily a microeconomic case study, you are entitled to consider
relevant
macroeconomic theories/issues where appropriate, but this is
not
essential.

unifolks_636709462145089691_120663_1.docx unifolks_636709462145089691_120663_2.doc unifolks_636709462145089691_120663_3.docx

Akansha · Accepted Answer

Economic Analysis		1
Name of the student:
Name of the institution:
Roll No:
Date of Submission:
Contents
Introduction	3
Economic Analysis	3
Consumer welfare	3
Producer welfare	4
Efficiency	5
Functions of the market	5
The intervention of the government	6
Statistics and Figures	6
If the ban had been lifted	8
Conclusion	9
References	11
Introduction
Cyclone Yasi was one of the most severe cyclones that could have hit the Australian Coast. The storm, which was classified as a severe tropical storm under the Australian scale was very destructive to the people of Australia. There had been a lot of damages those had been caused due to the storm, and there have been many deaths those were reported as well. The cyclone has caused an estimated AUD 2.3$ billion of loss to the government. Thus, resulting as a big blow to the Australian population as well as the government. The damage that was to the property and houses could be replaced and rebuilt efficiently. However, the other damages like the loss of the farms and the crops could not be recovered or rebuilt easily. There have been cases where entire trees had been ripped apart by the storm, which could have been resulted in much major losses and damages. It was identified that due to the storm the one crop that suffered majorly was the banana plantation. 
Economic Analysis
Economic analysis is an extremely important step for looking at the ways those the Australian government used to handle the issue. This is needed as the government understands the importance of the banana plantation and crops and the importing of banana.
Consumer welfare
The first aspect is the aspect of consumer welfare. Consumer welfare is the individual benefits those are derived from a product. In this case, the product would be the banana that is referred by the population and the government. In most theories, consumer welfare refers to how satisfied the consumer is with the price and the income of the individual. This is assessed by the individual as well (Cook et al., 2011). There are lot of things that affect the consumer welfare, including the innovation that is made daily in the field of technology and an industry. For example, if there was a new type of banana that was healthier and cheaper than all the other species, then the consumer welfare about the other types of bananas would change as well. There are other things, like the quality of the product that is available now and the quality of the product that was available before that has resulted in the change in quality. Sometimes, in the case of a natural disaster, the reaction of the government can also affect the consumer welfare (Kompas & Che, 2009). In this case, consumer welfare would demand on popularity of the banana that had been as compared to the other fruits, which includes the quality of the banana being offered and the process that is being charged for it. The banana production was greatly decreased after the cyclone, and the effect was the immediate rise in prices and drop in quality of the bananas. Added to the fact that the government refused to import bananas, the consumer welfare would not have been high or positive about the bananas either. This has affected the industry greatly as well.
Producer welfare
The second aspect that should be looked at is the producer welfare. Producer welfare looks at the number of goods that the producer is willing to supply and the number of goods that the producer has received. In the case, the producer welfare looks at the producer as both the farmer and the middleman, which includes the lobbyists and the supermarkets. The producer welfare would also not be on positive end (Weinberg & Barker, 2012). The demand for bananas, especially in a tropical country that produces bananas would be very high. Even if the media reported the fact that bananas had become rare, it would still be in high demand all over the country. This would lead to a dramatic increase in the cost of the bananas. The cost of bananas went to around 100$ for 3 kilos (Lindsey & Comiskey, 2012).

The aftermath of Cyclone Yasi wiped out 75 percent of Australia's banana production. Prices had shot up in the past 10 days since 2 nd Feb 2011 from $2 per kilogram to as high as $15 per kilogram and...

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