Tasmanian supermarkets are experiencing an egg shortage as a result of reduced demand during the pandemic.
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.
From the article above answer the questions
(1) Using the demand and supply model, explain and illustrate graphically, why Tasmanian supermarkets are predicting the price rise of eggs. (Hint: Make sure you discuss the equilibrating process, and clearly outline the assumptions in discussing the factors causing the change in price and quantity).
(2) Use the determinants of price elasticity of demand to analyse whether the demand for ‘Eggs’ is likely to be price elastic or inelastic.
(3) Based on your analysis in question 2, explain and illustrate graphically what will happen to the total revenue of the eggs industry following the change in equilibrium price of eggs.