Supply and Demand of Coffee A key skill in economics is the ability to use the...

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Supply and Demand of Coffee A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. In this case study, you get a chance to demonstrate your ability to analyze the effects of several "shocks" to the market for coffee. Answer all parts of each of the scenarios below. Scenario 1: Suppose that, as part of an international trade agreement, the Bahrain government reduces the tariff on imported coffee. Will this affect the supply or the 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 the equilibrium price and quantity of coffee? Explain your reasoning (1.5 Marks) Scenario 2: Suppose the Health Ministry of Bahrain publishes a study finding that coffee drinking reduces the probability of getting colon cancer. How do you imagine this will affect the market 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 the equilibrium price and quantity of coffee? Explain your reasoning. (1.5 Marks) Scenario 3: Combine scenario 1 and scenario 2. Suppose that the Bahrain government reduces the tariff on imported coffee, and at the same time, the Health Ministry of Bahrain publishes a reputable study indicating that coffee drinkers have lower rates of colon cancer. What will the combined impact be on the equilibrium price and quantity of coffee? Explain your reasoning and show it graphically. Make sure you think this through carefully! (2 Marks) End of Questions: Best of luck Supply and Demand of Coffee A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. In this case study, you get a chance to demonstrate your ability to analyze the effects of several "shocks" to the market for coffee. Answer all parts of each of the scenarios below. Scenario 1: Suppose that, as part of an international trade agreement, the Bahrain government reduces the tariff on imported coffee. Will this affect the supply or the 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 the equilibrium price and quantity of coffee? Explain your reasoning (1.5 Marks) Scenario 2: Suppose the Health Ministry of Bahrain publishes a study finding that coffee drinking reduces the probability of getting colon cancer. How do you imagine this will affect the market 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 the equilibrium price and quantity of coffee? Explain your reasoning. (1.5 Marks) Scenario 3: Combine scenario 1 and scenario 2. Suppose that the Bahrain government reduces the tariff on imported coffee, and at the same time, the Health Ministry of Bahrain publishes a reputable study indicating that coffee drinkers have lower rates of colon cancer. What will the combined impact be on the equilibrium price and quantity of coffee? Explain your reasoning and show it graphically. Make sure you think this through carefully! (2 Marks) End of Questions: Best of luck

Answer rating: 100% (QA)

ANS1 Change in Supply It refers to a shift in the force of a commodity or a service irrespective of ... View the full answer