Friday, June 25, 2010

Coffee Supply and Prices

Coffee prices are on the rise, and the reason is supply (and demand), but mainly supply. Recently, coffee production in Columbia and Central America has dramatically decreased, resulting in a 30% increase in the price of coffee beans.

In economic terms, here we see that from a supply and demand model, there has been a shift in the supply of coffee to the left, and even though coffee demand is lower during the summer months, still is resulting in a rise in the price of coffee, exactly as the model demonstrates.

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