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Suppose that new medical research indicates that CONSUMPTION of Coffee can cause Colon Cancer, what economic...

Suppose that new medical research indicates that CONSUMPTION of Coffee can cause Colon Cancer, what economic effects regarding PRICE and QUANTITY of Coffee will this research have on DEMAND for Coffee and SUPPLY of Coffee?

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Answer #1

If the new medical research indicates that consumption of coffee can cause colon cancer then in the market of coffee, the demand for coffee will decrease while the supply of coffee will remain unchanged. So, at the existing price in the market there is now excess supply. There will be competition among sellers to sell the coffee and this will lead to a decrease in the price and quantity of coffee in the market. Hence if the new medical research indicates that consumption of coffee can cause colon cancer then it will lead to a decrease in price and quantity of coffee. For reference diagram is given below.

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