Article

Producers are warning consumers that the shortage could extend over a number of months and that prices could also increase.

In a number of areas, the shortage is due to producers reducing the size of their flock to deal with the reduced demand over the peak of the pandemic.

Demand for eggs has since risen as Covid restrictions ease, borders reopen and hospitality venues welcome back customers.

Tasmania's Pure Foods Eggs chief executive officer Kate Daley told ABC news that the shortage could last for a majority of 2022 as producers wait for their next flock of hens to be ready to begin laying.

"It takes months of planning to organise a chicken hatch date, and from the time the chicken emerges from its egg, it takes around 20 weeks before they are able to start laying eggs," she said.

"It's likely that there will be a shortage for much of 2022 until new flocks of hens start laying."

Flooding and an increase to input costs are also believed to have contributed to egg shortages in a number of areas.

Producers are warning that the price of eggs are predicted to increase to accommodate the rise in input costs.

Answer these questions as part of your response

1. Assume Eggs are sold in a perfectly competitive market and firms are making break-even. Explain and illustrate graphically, the effect of change in market price on the short run position of a single firm selling eggs.

2. Based on the short run position identified in Q1explain and illustrate graphically the effect of entry/exit on the long run position of the firm.

(Hint: your answer should include graphs for both market as well as individual firm.)

The framework for your answer should be to:

Identify the key issue in the questions provided

Analyse these key issues in the news article, within the context of the concepts discussed in the lectures and textbook

Use the appropriate economic model to illustrate the key issues graphically. Fully label the model and clearly indicate where changes occur

Explain the model and discuss the outcome

Provide the list of references used in answering the questions.

Part B will be assessed on your illustration and identification of the market, your explanation of the short-run position of the market and writing and formatting.

Grading Criteria On

Illustration of the market - Markets discussion - Exceptionally clear discussion of perfectly competitive markets.

Short run position of the firm - the writer has expertly illustrated and explained the profit maximizing position of a firm at a break-even position

Short run - Impact at break-even - Expert demonstration of the impact of increase in price on short-run position at break-even

Long- run position of the firm - the writer has expertly illustrated and explained the effect of entry/exit on the long run position of the firm

Illustration and identification of the market Graph - Excellent graphical depiction of concepts, excellent labelling

Writing and formatting - Structure and referencing - Answers are expertly structured with an introduction and conclusion, and questions are fully addressed. Referencing is perfect