Question

Brewed coffee is one of the most popular drinks in the world and a big market in Singapore. In recent years Singaporean consumers have become concerned that coffee farmers often receive very low prices by large coffee companies buying their beans and selling them in international markets. For this reason, fair tradecoffee has reached supermarket shelves and coffee shops. Because producing fair trade coffee includes providing extra income for the farmers, this product is more costly to makethan other coffee types of comparable quality. Using the demand-supply model, analyse this change inconsumer preferences. Examine the likely consequences in one or two markets of your choice.

Answer 1

We have considered 2 market

where milk is the complementary good and other is tea which is substitute good