7 A severe frost hit Brazil in July 1 975, damaging the coffee crop. The 1976 harvest was 9.5 million bags, down from the 1975 harvest of 23 million bags. Since Brazil is the world's leading coffee producer, there was a substantial reduction in the world supply of coffee in 1976. Use supply and demand analysis to describe:

(a) what happened to the price of coffee in 1976;

(b) the U.S. per capita consumption of coffee in 1976 compared to that in 1975;

(

c) the price of tea in 1976;

(d) the revenues of coffee producers in 1 976 (be careful).

Coffee is allocated by the market. Did the sharp reduction in supply create a shortage?

Why or why not?

Industrious students should obtain real-world data to back up their analysis.

Information on coffee prices and consumption for the United States is available in the Statistical Abstract of the United States (annual).