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Demand and Supply Balance
Table 1: Coffee Prices in Saudi Riyal per pound
Price in SAR Quantity Demanded (in bags) Quantity Supplied (in bags)
5 200,000 80,000
6 180,000 120,000
7 160,000 160.000
8 140,000 200,000
a) Draw the supply and demand curve.
b) What is the equilibrium price and equilibrium quantity?
c) What is going to happen to the equilibrium price and equilibrium quantity if a draught is going to destroy the coffee harvest in Brazil, one of the largest coffee bean producers in the world? Just mention the direction of change not any actual numbers.
d) What is going to happen to the equilibrium price and equilibrium quantity if, in addition to the draught in Brazil, a global recession reduces the demand for coffee beans.
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