Problem
Price data shows that Banana prices was as high as $13-S16 dollars per kilo after February 2011 as a result of cyclone Yasi.
In 2016, banana prices have slumped to as little as $1.50 a kilogram in Australian chain stores such as Coles as a result of a warm, wet start to winter and a lack of cyclones in the main banana production hub of far north Queensland. At the moment Howes Farms is selling green bananas to the chains for about $1.20 a kg, and they need closer to $1.60 a kg to meet costs.
In May 2016, the retail price in Australian supermarkets (e.g., Coles and Woolworths) even slipped to $1.00 in some days as an attempt to clear overstocked supermarket shelves.
1. What movements in supply and demand causes the banana price to slump from $13-$16 dollars per kilo in 2011 Feb to $1,20 per kilo in 2016?
2. Why could supermarket chains still sell the banana at a price of $150 higher than its wholesale price ($1.20)? Justify your answer by considering the market structure that the supermarket chains are operating in.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.