Team B: Walelia Naholowa’a, Priscilla Swanson, Delniece Williams, Nigel Sturge ECO/212
February 26, 2012
Coffee Supply, Demand, and Price of Elasticity
Statistics show that over half of the American population consumes coffee on a daily basis. You may drink coffee hot, cold, mixed, or even in a frappuccino. Individuals are able to make coffee at home, or buy it on the go. Coffee provides people with caffeine, which ultimately gives energy for hardworking people all around the world. The main focus for this paper will cover the following topics, with coffee as the basis: causes for shifts in supply and demand, how coffee supply and demand influence price, quantity, and market equilibrium, followed by a determination of whether or not coffee is a necessity or luxury product. So now let Team B get started with an examination of the causes for shift in supply and demand for this popular beverage. Causes for shifts in supply and demand
Supply and Demand for coffee could be shifted if a natural disaster occurred in a country where the main crop is coffee and main product traded is coffee. The supply of coffee may become limited and the demand of coffee would be higher. Coffee suppliers may raise prices because the supply of coffee is limited. Another shift which could affect supply and demand for coffee is if artificial coffee products were created to provide the same affects as coffee but did not add calories or were considered to be less money than purchasing coffee. If coffee was ever proven to cause terminal illness such as cancer or diabetes et cetera, this information could definitely shift the demand of a product. This results in a change in consumer tastes and preferences in a negative manner that decreases demand (shifts it left). A decrease in demand will lower both equilibrium price and quantity. Coffee Price could eventually go down due to increase in demand or go higher...