Part I

Analyze the coffee market conditions below by describing the direction of the movement of the curve (moving or shifting) and explaining the final condition (conclusion):

a. Decreased coffee-making input costs

b. Increased coffee drinking habits

c. People's income is declining

d. Coffee prices are dropping

e. Sugar prices increase (note: sugar is complementary to coffee)

f. Tea prices decrease (note: tea substitutes for coffee)

g. Labor costs increase

h. Coffee exports go up

i. Decreased coffee imports

j. Tea imports increase

Part II

Analyze the phenomenon below using the S and D curves. Use the three steps of Supply and Demand analysis in analyzing the phenomenon.

a. Coffee makers were invented and people's incomes decreased due to layoffs.

b. The habit of drinking tea is increasing as awareness about the health and labor costs of coffee brewing increases.

c. The flood disaster hit coffee plantations and the people's coffee-drinking lifestyle declined.