Analyze the effects of several shocks to market for coffee

Reference no: EM132370632

Discussion Topic: A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. In this week's discussion, you get a chance to demonstrate your ability to analyze the effects of several "shocks" to the market for coffee. Choose one of the three scenarios below.

Scenario 1: Suppose that, as part of an international trade agreement, the U.S. 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.

Scenario 2: Suppose the National Institutes of Health 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.

Scenario 3: Combine parts 1 and 2. Suppose that the U.S. government reduces the tariff on imported coffee, and a reputable study is published 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 graphically. Make sure you think this through carefully!

Submission Requirements:

• The discussion grade will be based on how thorough and detailed your posts are.

• Your initial post must be published first, should be substantial, and answer the question(s) in detail.

• You must post at least TWO replies to other students' posts.

• Your replies must be a minimum of 5 sentences long and, again, must be meaningful and detailed.

• Proofread the content of your posts before making them public. Proper grammar and sentence structure are expected.

Reference no: EM132370632

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