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Coffee Market

In: Business and Management

Submitted By ronalio14
Words 1262
Pages 6
The coffee market case study

1. The nominal and real prices of a product are two very different things. Nominal refers to the price of the product at a given period of time. However the real price of the product is the nominal price which has been adjusted due to changes that happen in the economy such inflation. This happens because, over time the prices of products rise and the value of money falls. Therefore expressing prices over a long period of time can sometimes be misleading. The peaks and troughs show when coffee prices were very high and when they were very low. When the real price of coffee is calculated, taking the nominal price in 1970 and multiplying it by the 2010 price, it shows that the 2010 price has fallen, which means coffee has become cheaper.

2. Quantity demanded is the amount that customers actually purchased or wish to purchase. There are several key determinants of demand for green coffee; some of these include the price, income or wealth, the population of the country, taste, the environment or even various acts of government.

Price
Quantity demanded
Price
Quantity demanded

The demand curve above shows the relationship between quantity demanded and price of coffee, holding all other factors, that the factors constant.

Price
Quantity demanded
Price
Quantity demanded

The table above shows a shift the demand curve due to an increase of disposable income among a population 3. A. Demand for green coffee would increase, if income levels in China were to rise. This will cause a shift to the right on the demand curve as consumers will buy more coffee. Price
Quantity demanded
S
D1
D2
Price
Quantity demanded
S
D1
D2

The demand curve above shows what would happen to the market for coffee if income rises in China. B. If the price of tea was to...

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