Demand and Supply Balance

Table 1: Coffee Prices in Saudi Riyal per pound

Price in SAR        Quantity Demanded (in bags)    Quantity Supplied (in bags)

5              200,000                 80,000

6              180,000                 120,000

7              160,000                 160.000

8              140,000                 200,000

a) Draw the supply and demand curve.

b) What is the equilibrium price and equilibrium quantity?

c) What is going to happen to the equilibrium price and equilibrium quantity if a draught is going to destroy the coffee harvest in Brazil, one of the largest coffee bean producers in the world? Just mention the direction of change not any actual numbers.

d) What is going to happen to the equilibrium price and equilibrium quantity if, in addition to the draught in Brazil, a global recession reduces the demand for coffee beans.