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1.3 Price determination in a competitive market

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Question 40

Figure 2 shows supply and demand in the market for coffee. D1 D_1\,D1​ shows the initial demand and S1 S_1\,S1​ the initial supply curve.

Figure 2: Supply and demand curves for coffee

Which one of the following combinations of events would be most likely to cause demand to shift from D1 D_1\,D1​ to D2 D_2\,D2​ and supply from S1 S_1\,S1​ to S2S_2S2​?

An increase in the price of tea and a rise in shipping costs for coffee beans

A media campaign highlighting the health benefits of caffeine and a drought in coffee-growing regions

A reduction in the price of tea and a bumper harvest due to exceptionally favorable weather

An increase in corporate taxes on coffee retailers and a rise in consumers' disposable incomes

1.3 Price determination in a competitive market Questions

  1. A Level
  2. /Economics
  3. /1.3 Price determination in a competitive market