Answer questions Essay Example | Topics and Well Written Essays - 1250 words

Answer questions - Essay Example d. Coffee prices are expected to rise rapidly in the next few months. Indicate the immediate Effect. e. Workers in the coffee industry form a trade union and succeed with claims for higher Wages. Answers: a) When a severe frost destroys much of the Brazilian crop the supply curve of coffee will shift to the left. It is assumed that the demand will remain the same. Therefore the market equilibrium will shift to the left. b) If coffee is shown to cause cancer in laboratory experiments on mice it is expected that the demand for coffee will fall down sharply. The supply for coffee is assumed to remain the same. The demand curve will shift to the right and the new market equilibrium will also shift to the right. c) If the price of tea declines sharply the demand for coffee is expected to fall. The demand curve will shift to the left and the equilibrium point will shift to the left. d) If the price of coffee is expected to rise in the next month, the demand for coffee will rise immediately . Therefore the demand curve will shift rightwards and the market equilibrium point will shift to the right. The other conditions are assumed to remain unchanged. e) If the workers in the coffee industry form a trade union and succeed with claims for higher Wages, then the price of coffee will rise. ... In your explanation you must refer to aspects such as: Demand, wants, needs and desires Determinants of demand and supply Demand versus quantity demanded Movement along versus shifts of the curves Equilibrium Price and Quantity Surplus vs. Shortage. Answer: A market is a place where buyers meet sellers. The households purchase the products of their needs from the sellers in the market and the sellers charge their price. The determinants of demand and supply are the price of the good, the price of the substitutes, the income of the consumers, and the anticipated price level of the future and tastes of the consumers. An increase of demand can take place if the income of the consumers rise, the price of the product itself falls. The following diagram shows the demand supply analysis of the chosen product. In this case it is assumed that the market is competitive and so the demand curve is horizontal. In this case a parallel shift in the supply schedule leads to lower demand (Michigan St ate University, n.d. p. 1). The quantity demanded has fallen to Q1from Q0. The price is remaining the same in the market. A leftward shift of the supply schedule lead to fall in quantity demanded. The following diagram provides a clearer picture. In this case the supply curve shifted to the left while the demand curve remained unchanged. The initial equilibrium in the market has fallen as a result. The new equilibrium quantity is at a higher level than the initial one while the new equilibrium price is at a lower level than the initial one (University of Pittsburg, 2012, p. 2). The point where the demand by the consumers is matched by the supplies of the producers is regarded as the equilibrium point. The following