Supply, Demand and Price Elasticity of Coffee - 1001 Words

When many individuals wake up in the morning, the first thought they often have is: where is the coffee? The price of coffee fluctuates no matter what quantity is sold. The following paper will discuss what makes the price of coffee rise and what consumers do when the price is more than they are willing to pay. Many factors are taken into consideration when the price of coffee is being determined. The main two factors are the supply that is demanded and the availability of substitutes, which will be discussed below. Coffee is a commodity enjoyed all over the world. Bistros in Paris to large franchise chains in the United States; the fact is people love coffee. Take a look at the causes for shifts in supply and demand for one†¦show more content†¦Some would say that coffee is a luxury, while others will argue that coffee is a necessity. Since a good is considered a necessity when the quantity that consumers buy is not dependent on its price then coffee is considered a luxury. This was chosen because the quantity that people buy is dependent on its price. With there being substitutes for coffee that are less expensive, consumers will quit buying coffee when the price is too high (Hubbard O’Brien, 2010). Most consumers buy coffee as a result of wanting the caffeine coffee supplies. Instead of buying coffee, consumers could choose to purchase another beverage with a high level of caffeine, such as a carbonated beverage, tea, or even an energy drink, or shot. Some consumers may also decide to purchase caffeine pills from a local pharmacy instead of forking out the cost for coffee. The price elasticity of coffee is impacted primarily by the amount of substitutes that can replace it. These substitutes could be considered a necessity or a luxury. The more substitutes a product has, the greater price elastic the product. Luxuries have more of price elasticity because luxuries are not considered to be something needed to survive. With coffee having many substitutes and being a luxury it has a high elasticity (Hubbard O’Brien, 2010). In conclusion, coffee prices may rise and fall periodically throughout the year. Whether someone is just waking up, or taking a stroll downShow MoreRela tedEssay about Coffee Supply, Demand and Price Elasticity985 Words   |  4 PagesCoffee Supply, Demand, and Price Elasticity Team B: Walelia Naholowa’a, Priscilla Swanson, Delniece Williams, Nigel Sturge ECO/212 Robert Coates February 26, 2012 Coffee Supply, Demand, and Price of Elasticity Statistics show that over half of the American population consumes coffee on a daily basis. You may drink coffee hot, cold, mixed, or even in a frappuccino. Individuals are able to make coffee at home, or buy it on the go. 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Supply and price can be affected byRead MoreCoffee Consumption in USA1265 Words   |  5 PagesSynopsis National coffee drinking trends statistics in 2012 shows a tremendous increase in the consumption of coffee in the country. The data show a general increase in all demographics consumption behaviors. Significant increase is in age groups 18 to 39 with the largest jump in consumption observed in gourmet coffee. The data from the national coffee association (NCA) show current behaviors of coffee consumption such as single cup brewing taking the lead in coffee taking style. Data collectionRead MoreHomework Ecn 2111655 Words   |  7 Pages Assume the demand for watermelons is downward sloping. A decrease in price from $3 per pound to $2 per pound [A] could have been caused by an increase in supply. [B] will cause an increase in supply. [C] will cause a smaller quantity of watermelons to be demanded. [D] will cause demand to decrease. [E] will cause demand to increase. 5. 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