Answer to Question #96945 in Microeconomics for cainy

Question

. 1. Explain how the world price of coffee might be expected to change by the end of
2013??

P↑= S↑, P↓= S↓ (+)
D= ↑, S= ↓
P ↓ = D ↑, P ↑ = D ↓ (-)
can you explain this one.

Answer 1

·        P↑= S↑, P↓= S↓ (+)

When Coffee price increase, Coffee supply will increase and when price decrease, supply also decreases. The reason is the positive relationship between price and supply

Figure 1

Price increase $P1\to \ P2$ quantity of supply increase $Qs1\to\ Qs2$

·        D= ↑, S= ↓

This case Demand is increases and Supply decreases. When price decrease, demand is increased. Because price and demand have a negative relationship. If Price decreases supply will decrease. Because price and supply have positive relationship.

P ↓ = D ↑, P ↑ = D ↓ (-)

When Coffee price decreases, demand will increase. When Price increase demand will be decreased. The reason is price and demands have a negative relationship

Figure 2

Price decrease to $P2\to \ P1$ quantity of demand increase $Qd1\to\ Qd2$