To illustrate graphically how various events impact the demand for cups of coffee, consider the demand curve on a standard supply and demand graph:
- The horizontal axis (x-axis) represents the quantity of coffee cups demanded.
- The vertical axis (y-axis) represents the price of coffee cups.
- The demand curve slopes downward from left to right, showing that as price decreases, quantity demanded increases.
Here is how each event affects the demand curve:
a. A new study finds that consuming at least one cup of coffee a day
reduces the chance of heart disease
- This positive health news increases consumers' preference for coffee.
- Demand increases, shifting the demand curve to the right.
- At every price level, more coffee cups are demanded.
- Result: Higher equilibrium quantity and higher equilibrium price
b. An increase in the price of creamer (a complement to coffee)
- Creamer is a complementary good used with coffee.
- As creamer becomes more expensive, some consumers reduce coffee consumption.
- Demand for coffee decreases, shifting the demand curve to the left.
- Result: Lower equilibrium quantity and lower equilibrium price
c. A technological improvement for harvesting coffee beans
- This event primarily affects supply, not demand.
- The supply curve shifts to the right (increase in supply), lowering coffee prices.
- At lower prices, quantity demanded increases (movement along the demand curve).
- Demand curve itself remains unchanged
Summary of Graphical Effects on Demand for Coffee Cups
Event| Demand Curve Shift| Effect on Price| Effect on Quantity
---|---|---|---
Health study promoting coffee benefits| Right (Increase)| Price rises|
Quantity rises
Increase in price of creamer (complement)| Left (Decrease)| Price falls|
Quantity falls
Technological improvement in harvesting (supply)| No shift in demand| Price
falls| Quantity rises (movement along demand)
These shifts reflect changes in consumer preferences and related goods, which directly affect demand, while supply-side changes affect price and quantity through supply curve shifts and movements along demand
. No direct graphical data was found in the search results, but this explanation aligns with standard economic principles and the examples provided in the sources.
