Summary Suppose that, as part of an international trade agreement, the U.S. government reduces the tariff on imported coffee.docx
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Course
Uop
Institution
University Of Phoenix
A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. In this week’s discussion, you get a chance to demonstrate your ability to analyze the effects of several “shocks” to the market for coffee. Choose one of the three scenarios below.
Sce...
A key skill in economics is the ability to use the theory of supply and demand
to analyze specific markets. In this week’s discussion, you get a chance to
demonstrate your ability to analyze the effects of several “shocks” to the
market for coffee. Choose one of the three scenarios below.
Scenario 1: Suppose that, as part of an international trade agreement, the
U.S. government reduces the tariff on imported coffee. Will this affect the
supply or the demand for coffee? Why? Which determinant of demand or
supply is being affected? Show graphically with before- and after-curves on
the same axes. How will this change the equilibrium price and quantity of
coffee? Explain your reasoning.
If this will affect the supply or the demand for coffee
Yes…simply because the foreign firms will benefit through ultimately pebbledash
increased competition in the market for coffee that results to higher supply
levels and lower prices for consumers and this is caused by decrease in tariffs
which will allow the imports
Diagram:
The determinant of demand or supply is being affected
I think the determinant being affected here is the price of coffee since when the
tariffs are reduced then the price of coffee will automatically reduce
How this will change the equilibrium price and quantity of coffee
This is because when a coffee hits the demand for the coffee prices rises
changing from D1 to D2 and the supply increases so when the demend for
a coffee goes up the the suppliers of the commodity will automatically raise
the price
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