Question: Read the following text, which is based on a Sydney Morning Herald article: Australia is facing an egg supply problem, after an outbreak of bird
Read the following text, which is based on a Sydney Morning Herald article: "Australia is facing an egg supply problem, after an outbreak of bird flu shut down two poultry farms. About 450,000 chickens have been destroyed at a free-range and caged egg farm in Young, NSW, creating a national shortfall".
For your own working, illustrate the above in a supply and demand diagram for the market for free-range eggs. You do not need to submit this diagram; you can use the diagram to answer the questions below.
(a) Using full sentences, explain which curve shifts, and the direction of the shift. State the expected effects on equilibrium price and quantity traded.
(b) If, for some reason, the price of free-range eggs were not allowed to rise, what would be the result?explain what would happen to price and quantity traded, and how you would amend your diagram.
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