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Terron's choice company selling health supplements and related products

in Hong Kong. Assuming that you were an assistant manager of this company. Your boss wanted to introduce a project selling the local organic agricultural product through the outlets of your company. He asked you to prepare simple demand and supply analysis about the business of local organic agricultural product in Hong Kong and identify any possible impacts on the market outcomes.


After investigation, you identify the following 2 piece news which may affect the local organic agricultural product market:


(News 1) The government restricted the import of agricultural products from Mainland China especially after the explosion in Tianjin and the abusive use of chemical fertilizers;


(News 2) More and more Hong Kong people start the business of organic farming by renting the space in the local industrial estates.



-(a) Use the demand and supply analysis for the local organic agricultural product market. Explain what the effects on the equilibrium price and equilibrium quantity of local organic agricultural product are when "News 1" is considered only. No diagram is needed but you need to describe how the curve(s) shifts.(3 marks)
-(b) Use the demand and supply analysis for the local organic agricultural product market. Explain what the effects on the equilibrium price and equilibrium quantity of local organic agricultural product are when "News 2" is considered only. No diagram is needed but you need to describe how the curve(s) shifts. (3 marks)

3. (c)To consider both the effects in part (a) and (b) above, what are the different possible effects on the equilibrium price and equilibrium quantity of local organic agricultural product. Illustrate your explanation with demand-and-supply diagrams (14 marks)

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