A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. With this assignment, you get a chance to demonstrate your ability to apply what you have learned to the coffee market. Be sure to answer all parts of each of the scenarios below. Students may utilize Paint, Word (the shapes tool under Insert), OneNote (Draw tab), or hand draw the graphs. Scenario 1: Suppose that the FDA increases regulations for coffee. Will this affect the supply or demand for coffee? Why? Which determinant of demand or supply is being affected? Show graphically with before and after curves on the same axes. How will this change affect the equilibrium price and quantity of coffee? Explain your reasoning. Scenario 2: Suppose the Mayo publishes a study finding that the caffeine in coffee increases the probability of getting Alzheimer’s. How do you imagine this will affect the market for coffee? Which determinant of demand or supply is being affected? Show graphically with before and after curves on the same axes. How will this change affect the equilibrium price and quantity of coffee? Explain your reasoning. Scenario 3: Combine parts 1 and 2. Suppose that the FDA increase regulation of coffee, and a reputable study is published indicating that coffee drinkers have higher rates of Alzheimer’s. What with the combined impact have on the equilibrium
A key skill in economics is the ability to use the theory of
Scenario 1: Suppose that the FDA increases regulations for coffee. Will this affect the supply or demand for coffee? Why? Which determinant of demand or supply is being affected? Show graphically with before and after
Scenario 2: Suppose the Mayo publishes a study finding that the caffeine in coffee increases the probability of getting Alzheimer’s. How do you imagine this will affect the market for coffee? Which determinant of demand or supply is being affected? Show graphically with before and after curves on the same axes. How will this change affect the equilibrium price and quantity of coffee? Explain your reasoning.
Scenario 3: Combine parts 1 and 2. Suppose that the FDA increase regulation of coffee, and a reputable study is published indicating that coffee drinkers have higher rates of Alzheimer’s. What with the combined impact have on the equilibrium price and quantity of coffee? Explain your reasoning and show graphically. Make sure you think this through carefully
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