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Please answer Q4 a through f f(4) Coffee market [Past exam question] The graph below shows the global market for unprocessed coffee beans. It shows

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Please answer Q4 a through f

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\f(4) Coffee market [Past exam question] The graph below shows the global market for unprocessed coffee beans. It shows the world price and the quantity of beans bought for each quarter in 2005, 2006 and 2007. The market works by farmers growing coffee beans and then selling them on the open market to producers who roast, package and market the ground coffee. The global coffee market is perfectly competitive. Price and Quantity: Global Unprocessed Coffee 2005-2007 250 - Q3 2006 Q2 2006 200 101 2096 150 304 2006 Price per Tonne 100 # 01 2005 Q3 2005 50 -04 2005 Q2 2005 50 100 150 200 250 Quantity in millon Tonnes You are managing a team trying to work out how responsive the demand for unprocessed coffee is to price changes. During your research, you learn the following facts: . The price of tea doubled in the third quarter of 2006 and then decreases sharply in the fourth quarter. During the rest of 2005/2006 the price of tea has been constant. Disease wiped out half the Brazilian coffee crop in the first quarter of 2006. It takes two years for crops to recover. African growers' yields have been rising steadily in recent years with 2005 being a record year. The main African harvest occurs in April of each year. Answer the following questions, using a diagram if appropriate: (a) Account for the price and quantity movements from Q1 2005 to Q2 2005. (b) Account for the price and quantity movements from the last 2 quarters of 2005 to Q1 2006. (c) Account for the price and quantity movements during the three quarters following Q1 2006. 2

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