Supply and Demand, Markets, Prices and Price Setting
Supply and Demand, Markets, Prices and Price Setting
Cirilo "Lee" E. Montano
Trident University
Microeconomics
ECO201
Allison Kaminaga, Ph.D.
December 10, 2012
Explain what happens to price and quantity of coffee when the following events occur:
1. An advertising campaign highlights scientific studies that find drinking coffee can help reduce weight gain. a. What do you think would happen?
People will buy more coffee, drink more coffee, and research what coffee will help them lose more weight. Case in point, does espresso assist in more weight loss then normal coffee? Espresso contains more caffeine, so the thought process might be, that you can lose more weight by drinking espresso than you would drinking your everyday run of the mill ground up coffee.
Coffee will begin to go up in price because the demand is greater. What about coffee makers and espresso machines? Will people begin to purchase a newer model? Will their standard 5 cup coffee machine suffice? Will consumers buy espresso machines, if espresso indeed guarantees more weight loss to the consumer?
Yes, indeed all the above would happen. Take a look at the Starbuck’s Coffee craze. “In 2008, Americans were willingly paying $3 or more for a cappuccino or a latté, and Starbuck’s had grown to become an international chain, with over 16,000 stores around the world. The change in American consumers’ taste for coffee and the profits raked in by Starbucks lured other companies to get into the game. Retailers such as Seattle’s Best Coffee and Gloria Jean’s Coffees entered the market, and today there are thousands of coffee bars, carts, drive-through, and kiosks in downtowns, malls, and airports all around the country” (Rittenberg and Tregarthen,2009)
This faddish coffee from Starbucks is just a strong espresso coffee with steamed milk and flavoring. No real health benefit to it at all. It is actually dangerous. Have you ever bought a Venti Carmel Macchiato and you are walking out of the store
Cirilo "Lee" E. Montano
Trident University
Microeconomics
ECO201
Allison Kaminaga, Ph.D.
December 10, 2012
Explain what happens to price and quantity of coffee when the following events occur:
1. An advertising campaign highlights scientific studies that find drinking coffee can help reduce weight gain. a. What do you think would happen?
People will buy more coffee, drink more coffee, and research what coffee will help them lose more weight. Case in point, does espresso assist in more weight loss then normal coffee? Espresso contains more caffeine, so the thought process might be, that you can lose more weight by drinking espresso than you would drinking your everyday run of the mill ground up coffee.
Coffee will begin to go up in price because the demand is greater. What about coffee makers and espresso machines? Will people begin to purchase a newer model? Will their standard 5 cup coffee machine suffice? Will consumers buy espresso machines, if espresso indeed guarantees more weight loss to the consumer?
Yes, indeed all the above would happen. Take a look at the Starbuck’s Coffee craze. “In 2008, Americans were willingly paying $3 or more for a cappuccino or a latté, and Starbuck’s had grown to become an international chain, with over 16,000 stores around the world. The change in American consumers’ taste for coffee and the profits raked in by Starbucks lured other companies to get into the game. Retailers such as Seattle’s Best Coffee and Gloria Jean’s Coffees entered the market, and today there are thousands of coffee bars, carts, drive-through, and kiosks in downtowns, malls, and airports all around the country” (Rittenberg and Tregarthen,2009)
This faddish coffee from Starbucks is just a strong espresso coffee with steamed milk and flavoring. No real health benefit to it at all. It is actually dangerous. Have you ever bought a Venti Carmel Macchiato and you are walking out of the store
References: Rittenberg, L., & Tregarthen, T. (2009). Principles of Microeconomics (Vol. 1). Irvington: Flat World Knowledge. Retrieved November 26, 2012 http://www.ssireview.org/articles/entry/the_problem_with_fair_trade_coffee