Case study:AN OVERSUPPLY of oranges and a high Australian dollar has soured the national citrus market, cutting some orange growers' profits in half.

Citrus Australia said record rain this year produced a bumper crop, with 240,000 tonnes grown, at least 60,000 tonnes more than 2010.
The organisation’s chief executive, Judith Damiani, said citrus growers were really struggling as export returns were extremely low and the subsequent oversupply was forcing domestic returns down.
”Our citrus growers have survived the drought, frost and pest infestation, but unfortunately the exchange rate may be the final straw for many growers,” she said in a statement.
A Victorian farmer, Tania Chapman, said she had normally exported up to 80 per cent of her 12,000 bins of oranges, but that has reduced to 50 per cent this year.
”It is probably the worst season that we’ve faced,” she said. ”Compared to 2009, returns back to growers are down between 50 and 60 per cent.”
In some cases, people were lucky to be covering their picking costs, let alone the cost of growing the produce, Ms Chapman said.
Citrus Australia will launch a week of action tomorrow to get Australians behind farmers.
Free oranges will be handed out at Parliament House in Sydney and similar events will be held in Melbourne, Adelaide, Perth and Brisbane.
Question 1
Explain with the aid of appropriate diagram how an increase in income will impact the market for oranges.
Question 2
Using demand and supply model, explain the consumers and producers tax burden if the government decides to impose a tax on orange juice. You will need to clearly identify the price elasticity of demand and supply of orange juice.

 
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