The essay focuses on the economic analysis of the article on discovery and effects of new genes on the bread wheat production in Australian economy. The article says that researchers have found 21000 new variety of genes in 16 different varieties of wheat. Also the variations among the common wheat varieties have also been discovered. According to professor David Edwards, these new discoveries could help in the creation of disease resistant wheat varieties as well as it could open up opportunities in the wheat production in the world. Hence, this discovery of new genes has a positive effect on the horticulture industry of Australia. This not only would increase the variety of wheat to be produced, but it would improve the quality of wheat also by making it disease resistant (Logan, 2017).
The market for wheat is a market with perfect competition. Here, the product is homogeneous; there are many buyers and sellers; a single seller has no power to influence the market price, hence, the sellers are price taker (Kirzner 2015). The discovery and application of new disease resistant genes in the wheat is going to increase the supply of the wheat in the market. As better quality of wheat is ensured, and disease resistant genes ensure that the level of crop damage due to diseases is reduced, the supply of wheat will rise in the market (Tomek & Kaiser, 2014).
The above figure shows that initially the market equilibrium is at E1, with price P1 and quantity supplied Q1. With the introduction of new genes in the wheat varieties, the crop damage is reduced and better quality is supplied. Thus, supply of wheat rises in the market, and supply curve shifts rightward from S1 to S2. In the short run, demand will not change as the income and preferences of the consumers do not change. Thus, there is excess supply in the market at the initial price P1. To absorb this excess supply, the producers will decrease the price to P2 to reach the new market equilibrium at E2. The new equilibrium price is less than the initial equilibrium price and quantity is more than the initial quantity supplied.
Price elasticity of demand is the change in the quantity demanded due to one percent change in the price of the product. As wheat is an agricultural product and it is a necessary good; hence, wheat is relatively price inelastic. Even if the price changes, the demand for wheat does not get affected much (Thimmapuram & Kim, 2013)
Figure 2 shows the impact of price changes on the quantity demanded of wheat. As it is an agricultural and necessary product, changes in the price will not affect the quantity demanded much. It has a relatively inelastic demand curve. When the supply increases, the supply curve shifts rightwards to S2 from S1. The price falls from P1 to P2. Due to price inelasticity, the fall in price does not have a significant effect on the quantity demanded, as it rises from Q1 to Q2. Thus, revenue of the producers will not increase much (Wang & Dalal, 2015).
The discovery of new genes in the wheat varieties has a positive externality on the wheat production. Researchers assure that this new invention would help in the production of better quality and disease resistant wheat. The benefit will be enjoyed by everyone in the society. However, in this case, consumers will enjoy better and more bread wheat at a lower price. Therefore, producers might incur losses, as they would spend more for better quality seeds but would get less revenue. To solve this problem of positive externality, the government can give subsidies to the farmers. This subsidy would increase the revenue of the farmers, while the consumers do not have to pay extra price (Lin, 2014).
This essay has discussed the possible effects of the discovery of new genes in the wheat varieties as highlighted in the article, and the impact on the prices of wheat. The new 21000 genes in 16 varieties of common wheat breed are opening a new direction in the wheat production in Australia. This would not only offer better quality of wheat but also increase the supply, as diseases in the crop would be reduced. As demand remains unchanged in the short run, the price of wheat would fall and revenue would not increase much. Hence, to prevent the effects of positive externalities, the government should provide subsidies to the farmers.
Kirzner, I. M. (2015). Competition and entrepreneurship. University of Chicago press.
Lin, S. A. (Ed.). (2014). Theory and measurement of economic externalities. Academic Press.
Logan, T. (2017). Scientists make discovery that 'shakes up' foundations of wheat genome research. ABC News. Retrieved from https://www.abc.net.au/news/rural/2017-03-09/researchers-find-new-bread-wheat-genes/8337326
Thimmapuram, P. R., & Kim, J. (2013). Consumers' price elasticity of demand modeling with economic effects on electricity markets using an agent-based model. IEEE Transactions on Smart Grid, 4(1), 390-397.
Tomek, W. G., & Kaiser, H. M. (2014). Agricultural product prices. Cornell University Press.
Wang, W., & Dalal, R. C. (2015). Nitrogen management is the key for low-emission wheat production in Australia: A life cycle perspective. European Journal of Agronomy, 66, 74-82.
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2018). Theory And Measurement Of Economic Externalities. Retrieved from https://myassignmenthelp.com/free-samples/theory-and-measurement-of-economic-externalities.
"Theory And Measurement Of Economic Externalities." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/theory-and-measurement-of-economic-externalities.
My Assignment Help (2018) Theory And Measurement Of Economic Externalities [Online]. Available from: https://myassignmenthelp.com/free-samples/theory-and-measurement-of-economic-externalities
[Accessed 06 April 2020].
My Assignment Help. 'Theory And Measurement Of Economic Externalities' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/theory-and-measurement-of-economic-externalities> accessed 06 April 2020.
My Assignment Help. Theory And Measurement Of Economic Externalities [Internet]. My Assignment Help. 2018 [cited 06 April 2020]. Available from: https://myassignmenthelp.com/free-samples/theory-and-measurement-of-economic-externalities.
Students looking for Cheapest essay writing service can avail essay assignment help in Canada from MyAssignmenthelp.com. Students can get essay homework help on wide range of subjects. MyAssignmenthelp.com is one of the leading essay writing companies in Canada, which is serving studentsâ€™ need for assignments on vast and complicated subjects. This service provider is also a big name among mba essay writing service too.
Answer: Introduction Introduction to Accounting and Service Industry The main concern of this assessment is to analyse the role of accounting service industry in relation to other businesses which are operating in Australia. The accounting service industry has received immense recognition in the wake of scandals and growth of different businesses in the market. The main products which are offered by accounting service industry to different bus...Read More
Answer: Introduction Determination of the stakeholders is important for the contemporary business organizations due to the reason that diverse range of internal and external stakeholders is relevant in the current business scenario. The more effective will be the management of the stakeholders, the more will be the organizational competitiveness in the long term. However, it should also be noted that strategic approach should also be di...Read More
Answer: It has been found that the Collins foods as their corporate strategy make use of the cost leadership and differentiation strategy. These strategies are aimed at achieving the competitive advantage over the market rivals. The company has adopted the differentiation strategy as it can result in severe business benefits for the organization. It is designed to establish huge brand value which is different and unique from its marker competi...Read More
Answer: To: All the HR employees From: HR department Date: 02-02-2019 Subject: Contract Employment and its importance Hello everyone, Hope you all are doing fine! This is to inform you about the vitality of Contract Employment in workplace. You all might be well aware of the fact that the contract of employment is a very important document because it ensures regulation of all the terms and conditions of the very employment agreemen...Read More
Answer: Discuss a range of relevant approaches to quality management Royal Flying Doctor Service of Australia (RFDSA) is among the leading and most comprehensive aero-medical organizations globally. It provides primary and emergency health care amenities for people living in remote, rural and local areas of Australia (Australian Government: Department of Health, 2018). Royal Flying Doctor Service of Australia is a non-profit organisation...Read More
Just share your requirements and get customized solutions on time.
Our writers make sure that all orders are submitted, prior to the deadline.
Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.
Feel free to contact our assignment writing services any time via phone, email or live chat.
Our writers can provide you professional writing assistance on any subject at any level.
Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.
Get all your documents checked for plagiarism or duplicacy with us.
Get different kinds of essays typed in minutes with clicks.
Calculate your semester grades and cumulative GPa with our GPA Calculator.
Balance any chemical equation in minutes just by entering the formula.
Calculate the number of words and number of pages of all your academic documents.
Our Mission Client Satisfaction
Very fast and smooth service. The assignment I have received was highly satisfied.
it was grade homework and great time , I have a 5 point thanks , I will work with you always.
It was done very nicely and well before the deadline. I am very happy with the content and the expert
The work done was amazing! Helped me to get through my semester in flying colors. Worth every penny!