In economics, they say a picture is worth a thousand words. Below, you will find two scenarios. Your assignment is to discuss the situation by writing the solutions, and then show the solutions. You may use graphs or flowcharts to help illustrate your answer.
Scenario One
Supply and demand are foundational concepts in understanding economic theory. Whether you are a coffee drinker or not, you have been tasked to examine the impact of supply and demand when dealing with the coffee retail industry. A few companies probably come to mind. Pick a major coffee retailer, and then contemplate what has been happening to both the supply and demand for this product.
Next, analyze the following scenario that deals with what happened in the coffee industry at the beginning of the last decade:
In the early part of the last decade, there was an overproduction of coffee. What do you think happened to the price of coffee and why?
During the last decade before the Great Recession of 2008 individuals' incomes had increased as the U.S. economy expanded. The demand for gourmet coffee also changed with the increased income. Do you think that people demanded more or less gourmet coffee? Why?
How were coffee retailers faring in the marketplace?
Scenario Two
In this next scenario, start your discussion by examining the differences between the definitions of the macroeconomics and microeconomics. Next, discuss how the concepts of supply and demand relate to (1) microeconomics and (2) macroeconomics.
For you to demonstrate understanding of supply and demand from the perspective of microeconomics versus macroeconomics, pick 2 of the 10 scenarios below and discuss the following questions:
Is the scenario a macroeconomic or microeconomic example of supply and demand?
Is this impacting supply or demand?
Is this example going to experience a shift or a movement of supply or demand?
As a result of this change, what happened to equilibrium price and quantity?
The 10 examples for you to consider are as follows:
After Hurricane Katrina, what happened to the price of fish?
After the development of the microchip, what happened to the price of computers?
After the government raised tariffs on imported cheese, what happened to the price of domestic cheese?
Polyester suits have become trendy again. What happens to their price?
Internet auction sites are becoming more popular, and people are using them more and more.
A new health report came out that said red wine lowers cholesterol.
The government raises taxes.
Inflation increases.
Immigration laws are relaxed.
The government increases spending.