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Suppose we are analysing the market for café latte. Graphically illustrate the impact each of the...

Suppose we are analysing the market for café latte. Graphically illustrate the impact each of the following on demand or supply. Also show how equilibrium price and quantity would change. (a) The hot season starts and the weather turns warmer. [5 marks] (b) The price of tea, a substitute for café latte, increases. [5 marks] (c) The price of coffee beans increases. [5 marks] (d) A better method of harvesting coffee beans is introduced. [5 marks]

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Answer #1

a) demand would decrease (left shift of demand curve) and both equilibrium quantity and price would decrease.

b) demand would increase (right shift of demand curve) and both equilibrium price and quantity would increase.

c) supply would decrease (left shift of supply curve) and equilibrium quantity would decrease while equilibrium price would increase.

d) supply would increase (right shift of supply curve) and equilibrium quantity would increase while equilibrium price would decrease.

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