Econ problem set 1

Econ problem set 1 - Siddharth Joshi Global Econ 8a...

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Unformatted text preview: Siddharth Joshi Global Econ 8a Economics Problem Set 1 1. For the period 1998-2001, there was an increase in coffee production and the surplus coffee quantity went from 6.5 million to 10.8 million bags of coffee, causing the prices to fall. When there is a surplus, the excess supply causes the market prices to drop, and such a large increase in surplus greatly depressed prices. Further, because of poor conditions in Brazil such freezing cold temperatures, drought and frost there was a raise in price in 1997. This caused an increase in supply in a market that already had a surplus and hence the price for coffee fell even more. The Adam Smith Institute had many criticisms on fair-trade coffee. First, Fair Trade Coffee is a brand, a political product with a higher price than normal coffee. It costs more than a regular cup of coffee for only this reason. Not justifying its higher price, not many consumers choose to drink it, minimizing its effect. I agree with this criticism because fair-trade coffee is not having a big effect, being only 1% of coffee bought, unless further cause is given to consumers to purchase this coffee then it will not have the desired effect....
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This note was uploaded on 04/17/2008 for the course ECON 8b taught by Professor Zamb during the Winter '08 term at Brandeis.

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Econ problem set 1 - Siddharth Joshi Global Econ 8a...

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