Economics: Demand and Supply Dynamics, Monopoly and Regulation

Running head: ECONOMICS
Economics
Name of the Student
Name of the University
Course ID

ECONOMICS1
Table of Contents
Question 1 (a).............................................................................................................................2
Question 1 (b).............................................................................................................................4
Question 1 (c).............................................................................................................................5
Question 1 (d).............................................................................................................................6
References..................................................................................................................................8

ECONOMICS2
Question 1 (a)
i)
Figure 1: Demand and supply dynamics in coffee market
Price in a market is determined from dynamics of demand and supply. The direction
and magnitude of price change depends on associated change in demand and supply. The
coffee market has experienced an expansion of both demand and supply condition (Cowell
2018). As shown in the above figure an increase in supply due to production of coffee in new
countries, increase in agricultural productivity and for other positive factors shifts the supply
curve right to S1S1. Coffee demand increases due to increase in income and shifts the demand
curve outward to D1D1. As supply increases more than demand does, at the new equilibrium
price of coffee falls (134 cents to 50 cents) and equilibrium quantity of coffee increases.