Full Answer Section

Normal good or inferior good: Coffee is a normal good. This means that the demand for coffee increases when income increases. This is because people with higher incomes can afford to buy more coffee.

Nonprice factors that could cause an increase or decrease in the demand for coffee:

• Changes in taste: If people’s taste for coffee changes, it could cause the demand for coffee to increase or decrease. For example, if people start to prefer tea over coffee, the demand for coffee would decrease.
• Changes in price of substitutes: If the price of a substitute for coffee decreases, it could cause the demand for coffee to decrease. For example, if the price of tea decreases, people might choose to drink tea instead of coffee.
• Changes in income: If income increases, the demand for coffee would increase. This is because people with higher incomes can afford to buy more coffee.
• Changes in advertising: If there is more advertising for coffee, it could cause the demand for coffee to increase. This is because advertising can make people more aware of a product and make them want to buy it.

Nonprice factors that could cause an increase or decrease in the supply of coffee:

• Changes in production costs: If the cost of producing coffee increases, it could cause the supply of coffee to decrease. This is because producers would be less willing to produce coffee at a lower profit.
• Changes in technology: If there are technological advances that make it easier to produce coffee, it could cause the supply of coffee to increase. This is because producers would be able to produce coffee more efficiently and at a lower cost.
• Government policies: Government policies can also affect the supply of coffee. For example, if the government imposes a tax on coffee, it could cause the supply of coffee to decrease.

How a change in demand affects the equilibrium price and quantity of coffee:

A change in demand will cause the equilibrium price and quantity of coffee to change. If the demand for coffee increases, the equilibrium price will increase and the equilibrium quantity will increase. This is because when demand increases, producers are willing to supply more coffee at a higher price.

Conversely, if the demand for coffee decreases, the equilibrium price will decrease and the equilibrium quantity will decrease. This is because when demand decreases, producers are willing to supply less coffee at a lower price.

How a change in supply affects the equilibrium price and quantity of coffee:

A change in supply will also cause the equilibrium price and quantity of coffee to change. If the supply of coffee increases, the equilibrium price will decrease and the equilibrium quantity will increase. This is because when supply increases, consumers are willing to buy more coffee at a lower price.

Conversely, if the supply of coffee decreases, the equilibrium price will increase and the equilibrium quantity will decrease. This is because when supply decreases, consumers are willing to buy less coffee at a higher price.

What to expect to happen to the demand for coffee over the next five years:

The demand for coffee is expected to increase over the next five years. This is because the global population is growing and people in developing countries are starting to drink more coffee. Additionally, coffee is becoming more popular as a health beverage.

However, the demand for coffee could also decrease if the price of coffee increases too much. Additionally, the demand for coffee could decrease if people start to prefer other beverages, such as tea or energy drinks.

Overall, the demand for coffee is expected to increase over the next five years, but it is important to monitor the market for changes that could affect demand.