MGST-611 - US-Mexico Immigration Dispute has led to a Transportation Blockage - Economics Assignment Help

Assignment Task

1. You’re a producer of fruits and vegetables. You supply produce to local restaurants and grocery stores, and you directly sell to customers in local farmers’ markets. You operate in a very competitive market for carrots and tomatoes due to global supply chains.

A. A US-Mexico immigration dispute has led to a transportation blockage for tomatoes from Mexico, which provides a major share of tomato imports to Canada.

i. Describe the market for tomatoes before the transportation issue with a plot.
Identify the market equilibrium
. Include relevant labels on the plot axes.

ii. Show how the transportation issue altered the relevant market curve(s) in the short run and identify the new equilibrium
. How did the equilibrium change?

iii. In response to this new market equilibrium, you could change your short-run production quantity (and necessary short-run inputs to produce a new quantity).
a. Just looking at the new market equilibrium, should you consider changing your short-run production? If so, why? If not, why not?
b. If so, what factors should you use to decide on whether you should change your production, your new production amount, and your input amount(s)?

(Feel free to use any combination of writing and equations for this answer and to elaborate on your potential production process.) (Ignore this question if you think you should not consider new short-run production.)

iv. You’re constantly working to understand your customers’ demand curve for tomatoes. What can the transportation debacle tell you about the demand curve for
tomatoes? (Assume that this was the only market shock that occurred at this time.) Provide any relevant equations and interpretations of what they provide.

B. The provincial government has identified that nutrient enrichment of nearby waterways has become a major environmental and health issue, and your use of fertilizer contributes to this problem. The government is considering a regulation limiting the use of fertilizer for carrot production. Government and consulting firms estimate that this regulation would cost carrot producers $2 for every 10 carrots produced due to decreased productivity (net of reduced fertilizer costs). Due to industry outcry over potential competitiveness effects with imported carrots, the provincial government is also considering an equivalent tariff on imported carrots.

i. Identify how this regulation (and associated tariff, as one policy) would impact the provincial market for carrots and the market equilibrium with a plot and short explanation. Include relevant labels on the plot axes.

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