The paper "Econ Practice Questions" is an excellent example of a Macro & Microeconomics assignment. Labour is essential in every field and so more in lamb production. An increase in the wages for labor from the mining sector would mean that the cost of production increases as to retain workers producers in the lamb manufacturing business would have to pay similar or higher wages. This would mean that the margins of the lamb producers will be impacted. In the short run, it is not possible to make changes in the cost structure and would thereby result in reduced margins and increased cost (Bhaskar, 2007) as shown below The above graph shows that the supply of labor has decreased despite the demand being the same.
This has resulted in the equilibrium supply of labor to decrease from Eq1 to Eq2 whereas the equilibrium price which is charged has increased from Ep1 to Ep2 highlighting the lower supply at higher prices for labor. This will result in the producers paying more thereby having an impact on their margins and reducing the overall profits and margins for them.
This when denoted through the marketing margin behavior will look as It is clearly evident from the above chart using the marketing margin behavior that the change of incidence would be greater for the retail price. The above graph clearly highlights that the change of incidence is greater for the retail price as the change in price would be passed on the retailers which will result in a higher cost for them as well and reduced margins. This will thereby result in having a higher incidence cost and will directly relate to the manner in which the business is able to lose due to change in factors of production (Cottle & Wallace, 2005). Question 2 Australian Egg Corporation Ltd (AECL) has looked towards reducing the supply of eggs while ensuring the same or rise in demand to ensure that the producers of egg continue in the same profession and are able to make profits because of the fact that the supply is more than the demand.
The strategy adopted by Australian Egg Corporation Ltd (AECL) is as shown below Reducing the supply would mean that the price of an egg would go up as the demand remains the same so to match demand and supply the price have to move up.
This will ensure that the producers don’ t incur losses and are able to make profits from it.
Bhaskar, V. 2007. The competitive effect of price floor. The Journal of Industrial Economics, 25 (3), 329-341
Cottle, R. & Wallace, M. 2005. The effectiveness of supposedly ineffective price constraints. Journal of Business & Economics, 10 (4), 71-76
Mullen, J. and Keogh, M. 2013. The Future Productivity and Competitiveness: Challenge for Australian Agriculture. Australian Farm Institute