The third wave coffeehouse Intelligentsia offers 46 different “In Season” coffees over the course of the year. These coffees are sold to customers closer to the time the coffee beans were picked than is true of most coffee other coffeehouses sell. According to Intelligentsia’s president, James McLaughlin, “You have a 9-month window to get it packed up and shipped. After that, there’s a degradation of quality.”
a. Explain whether Intelligentsia achieves productive efficiency, given that it offers its customers such a large number of coffees, rather than the limited number that most other coffeehouses offer.
b. Briefly explain how Intelligentsia’s product differentiation may benefit its customers more than if the coffeehouse achieved allocative and productive efficiency.