Coffee Case-FINAL

Coffee Case-FINAL - Sigurd Rognmo Solvoll A00812709...

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Sigurd Rognmo Solvoll A00812709 “Economic Foundations”: Coffee Case PhD Araceli Ortega Coffee Case: “Minister of Costa Rica” As the Minister of Agriculture in Costa Rica, it has come to attention a lot of interesting and revealing things about the coffee crisis. The main question would be to investigate if one should shut down production of coffee or not. This report will therefore discuss the factors that influence supply and demand, and analyze the sensitivity of these factors. In the end will the report forecast and predict the following five years of Arabica prices. Investigations of the demand for coffee in the short run aspect have shown that there are a lot of variables that affects this. The customers taste of the different coffee products are known to affect the demand a lot and may. The income of the customers is another aspect that also affects the demand in the way they select for example less costly products. Tea that is a close substitute to coffee may also affect the demand of coffee. This could happen if the there for example is a lot of harvest of tea, that drives the price down and the supply up for tea. That will directly affect the demand for coffee, and shift the curve of demand inward and the price will go down and the quantity of coffee will go down as illustrated in the graph below. According to the long run predictions, it is more possible that demographic changes in
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Coffee Case-FINAL - Sigurd Rognmo Solvoll A00812709...

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