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Example of an agriculture commodity with particularly

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An example of an agriculture commodity with particularly volatile prices is coffee. The price of coffee on world markets fluctuates a great deal from year to year because of weather and because of the entry of new suppliers in Brazil and new supplying countries such as Vietnam.

[1] Who will lose when coffee prices fall as countries become more efficient at growing coffee and begin exporting them? Please explain your answer using the specific-factors model.

[2] Can anything be done to avoid the kind of boom-and-bust cycle that occurs regularly in coffee markets? Please specify at least two possible ways to solve this problem.

[3] If you are an economist, what trade policy would you suggest the government to protect your coffee farmers by propping up prices?

Reference no: EM133215171

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