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A key skill in economics is the ability to use the theory of demand and supply to analyze specific markets. With this assignment, you get a chance to demonstrate your ability to apply what you have learned to the coffee market. Be sure to answer all parts of each of the scenarios below. you may utilize Paint, Word (OneNote (Draw tab), or hand draw the graphs.
Case Scenario 1: Suppose that a major disease wipes out many coffee trees. Will this affect the supply or 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 affect the equilibrium price and quantity of coffee? Explain your reasoning.
Case Scenario 2: Suppose the headline news informs viewers about the coffee disease. How do you imagine this will affect the market for coffee? Which determinant of demand or supply is being affected? Show graphically with before and after curves on the same axes. How will this change affect the equilibrium price and quantity of coffee? Explain your reasoning.
Case Scenario 3: Combine parts 1 and 2. Suppose that a major disease wipes out many coffee trees, and the headline news informs viewers about the coffee disease. What will the combined impact have on the equilibrium price and quantity of coffee? Explain your reasoning and show graphically. Make sure you think this through carefully!
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