DD202A: Economic Analysis of Coffee Industry in Middle East Market

This essay examines the coffee industry in the Middle East, focusing on its remarkable growth despite recent economic downturns. The region's coffee consumption has surged, supported by a young demographic and evolving social dynamics. Major global brands like Starbucks, Costa Coffee, and Second Cup have expanded their presence, intensifying competition alongside local operators. The industry exhibits characteristics of a monopolistically competitive market, with product differentiation playing a key role. The essay also explores the impact of government restrictions and analyzes profit margins in both the short and long run, highlighting the shift from supernormal profits to zero economic profit as new firms enter the market. The analysis is supported by graphical representations of demand, marginal revenue, and cost curves to illustrate market dynamics and equilibrium points.