Question

please answer this question in 300 words ( no plagiarism )

Demonstrate and discuss each of the following would have on demand or supply of
coffee. Additionally, show how equilibrium price and quantity have changed.
a. A better method of harvesting coffee beans is introduced.
b. Medical researchers found that intake of more than two cups of coffee per day
drastically decreases risk of liver cancer.
c. Currently, the price of coffee is ₹15 per cup above equilibrium.
d. Consumer income falls because of a recession and coffee is considered a
normal good.
e. . Protesting liberal milk powder import policy, farmers dump millions of litres
of milk, causing milk prices to rise.

Answer 1

Part A) better method of harvesting coffee beans is introduced. it will increase the supply of coffee and supply curve will shift rightwards.

Due to that equilibrium price will decrease and equilibrium quantity will increase.

Part b) Medical researchers found that intake of more than two cups of coffee per day

drastically decreases risk of liver cancer.- it will increase demand of coffee and demand curve will shift upwards and due to that equilibrium price will rise and equilibrium quantity will rise.

Part C ( Currently, the price of coffee is ₹15 per cup above equilibrium.- it will decrease the demand due to less consumer surplus. It Will decrease the equilibrium price and quantity will fall.

Part d)Consumer income falls because of a recession and coffee is considered anormal good.-it will leads to decrease in aggregate demand and curve will shift left wards. There is positive relationship in income and demand in case of normal goods.

Equilibrium quantity will fall and equilibrium price will fall.

Part E)Protesting liberal milk powder import policy, farmers dump millions of litres

of milk, causing milk prices to rise- lead to fall in aggregate demand and equilibrium price and quantity will fall.