Question

you're enjoying a cup of moondogs coffee and trying to make sense of the data on this demand curve.pricecoffee demanded$1.50400 cups$2.00300 cups$2.50200 cups$3.00150 cups$3.50100 cups$4.0075 cups$4.5050 cupswhat does this demand curve indicate?

Answer 1

The demand curve data shows the typical inverse relationship between price and quantity demanded; as prices increase, the coffee demanded decreases. This phenomenon mirrors real-world examples of supply shifts like those caused by weather impacts or new producers entering the market, which have been shown to cause significant fluctuations in coffee prices.

Step-by-step explanation:

The data on the demand curve you provided illustrates a classic inverse relationship between price and quantity demanded, which is fundamental to the law of demand. As the price increases from $1.50 to $4.50, the coffee demanded decreases from 400 cups to 50 cups. This trend supports the principle that, ceteris paribus, when prices rise, demand falls, and vice versa.

To tie this into real-world scenarios, consider the impact of events like a significant frost damaging Brazilian coffee crops in 1994, which would have made the supply curve shift to the left, resulting in higher prices due to the inelastic demand curve for coffee. Conversely, when Vietnam became a major coffee producer, entering the global market in the late 1990s, it caused the supply curve to shift to the right, which, with coffee's highly inelastic demand, resulted in lower prices. These historical examples underline the dynamics that the simple demand curve represents, navigating through osmotic changes in market conditions and consumer behaviors prompted by external factors such as climatic anomalies or shifts in international production.