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1 page/β275 words
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Subject:
Business & Marketing
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Coursework
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English (U.S.)
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Topic:
Model of Supply and Demand
Coursework Instructions:
Please answer the two questions after watching the following video. the answers can be directly written under questions, no format is needed.
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Model of Supply and Demand
Assume that there is a stable demand among consumers and coffee shops for coffee (no panic buying). What would you expect to the change in the price of coffee worldwide and why?
The price of coffee worldwide would increase. Stable demand means that it is unchanging, and therefore, a need for supply to remain the same is needed. However, in this case, the biggest exporter by volume does not have the volumes to match the demand. Therefore, with reduced supply, the prices will increase quite greatly until they reach equilibrium. The equilibrium price is the price where the consumers' demand and the producers' supply match. A new equilibrium price will indeed be achieved, but this will be higher than the earlier price. Brazil will eventually recover, and a new equilibrium price will be attained. However, the cost of coffee worldwide will increase until a point of equil...
Assume that there is a stable demand among consumers and coffee shops for coffee (no panic buying). What would you expect to the change in the price of coffee worldwide and why?
The price of coffee worldwide would increase. Stable demand means that it is unchanging, and therefore, a need for supply to remain the same is needed. However, in this case, the biggest exporter by volume does not have the volumes to match the demand. Therefore, with reduced supply, the prices will increase quite greatly until they reach equilibrium. The equilibrium price is the price where the consumers' demand and the producers' supply match. A new equilibrium price will indeed be achieved, but this will be higher than the earlier price. Brazil will eventually recover, and a new equilibrium price will be attained. However, the cost of coffee worldwide will increase until a point of equil...
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