According to a news article on bloomberg.com, the
demand for coffee is increasing as “millennials’ seemingly
unquenchable thirst for coffee is helping to push global
demand to a record.” At the same time, coffee crops in
Brazil and Asia have been hampered by dry weather and
droughts. The article noted that “consumption is rising as
supplies are getting tighter.”
a. Use a demand and supply graph of the coffee market
to illustrate how the equilibrium quantity of coffee
can increase as a result of these events. Be sure that all
curves on your graphs are properly labeled, that you
show any shifts in those curves, and that you indicate
the initial and final equilibrium points.
b. The article contains a chart showing changes in worldwide sales of coffee from 2006 through 2016. The
chart is labeled “World demand has expanded in the
past decade.” Are data on the quantity of coffee sold
and data on the demand for coffee the same thing?
Can the quantity of coffee sold increase if the demand
for coffee hasn’t increased? Briefly explain.
Source: Marvin G. Perez, “Coffee-Loving Millennials Push Demand
to a Record,” bloomberg.com, October 30, 2016.