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Economy of Starbucks Coffee and Folgers Coffee
Plot the graphs using 10 for both Q and P. Start at 5 Q and 5 P as point A (equilibrium).
-Determine which goods are compliments and substitutes then determine which good is a normal and inferior good.
Supply and Demand
1) Starbucks raises prices by $1.00 for consumers, thus decreases quantity demanded.
2) Hurricane destroys coffee bean farms, thus decreasing production by 2 cups of coffee.
3) Recession hits California, thereby increasing/decreasing consumption by 1 good.
4) Monterey Park implements a subsidy, thus increasing production by 2 goods.
5) Which market(s) is/are experiencing a market failure?
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