Economic for Managers Tutorial in Week 3
Autor: Joshua • November 15, 2018 • 800 Words (4 Pages) • 657 Views
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coffee, it depend on what change happen in the market. Assuming that the change in the market is positive to coffee beans, that means there is increase in the supply of coffee beans. That will cause the increase in the supply of coffee beans and decrease in the price of that.
c. The change in the market on equilibrium price and quantity of powdered non-dairy creamer can cause both increase and decrease on the demand and supply of coffee, it depend on what change happen in the market. Assuming that the change in the market is negative to coffee, that means there is increase in the price of coffee causing a decrease in the demand of coffee. Because coffee and powdered non-dairy creamer are complementary goods, both demand and equilibrium price of powdered non-dairy creamer will decrease.
d. The change in the market on equilibrium price and quantity of tea can cause both increase and decrease on the demand and supply of coffee, it depend on what change happen in the market. Assuming that the change in the market is negative to coffee, that means there is increase in the price of coffee causing a decrease in the demand of coffee and increase the demand of tea. Because coffee and tea are substitute goods, so the increase in the price of coffee will reduce consumers who drink coffee and increase the demand of tea.
Application Question:
3.
a. Because of the decline in the coffee production in Brazil, the supply of coffee will become insufficient. But the demand can not reduce immediately, it cause a shortage of coffee in the world market. The producers can not offer more coffee and consumers need more coffee, all of this will increase the price of coffee.
b. With this shortage, the supply of coffee beans in the world market is not enough and the demand of coffee is still large. In the absence of supply, the producers have to raise prices to keep as much profit as they did before. Therefore, the price of coffee beans will keep rising up in 2014.
c. Because there is a shortage in the world market, the price of coffee beans which from Arabica will rise up in the first stage. But after the price rise up to the equilibrium, the demand will decline because of the high price. When the demand decrease, the price will rise up again in order to sale the coffee beans.
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