Microeconomy Assignment Example | Topics and Well Written Essays - 250 words

Microeconomy - Assignment Example In any market, it is obvious that the price of a commodity influences the demand. In the coffee market, other factors other than price do play a significant role in making a shift in coffee demand. They include Prices of other goods- this is the price individuals are willing to pay for the substitutes. Of the coffee price is higher compared to other products then the consumers will opt to purchase the substitutes There are two basic reasons put forth to explain the behavior of supply chain curve. As the production of goods is expanded, the consumers first turn to the resources and people whose opportunities costs of producing the good are lowest and only then to those whose opportunity costs are high. When the commodity price is high, the more likely the resources are relatively less efficient at producing the commodity. Secondly, it has been observed that the cost of good production rises as more of the good is produced hence the supply curve moving upward (Evans and Honkapohja 421). Much like the demand of coffee, its supply can be influenced by several shift factors of supply, which are the forces other than price that affects the quantity of the product to be supplied. When the global demand for coffee is high, its supply is good. In any way, when its demand declines in the global market then there is an automatic shift of its supply overall. Other factors include changes in technology meaning more production of the product. Changes in the price of raw materials or input resources, taxes and subsidies that are levied on the production meaning that the company can produce more of the product at cheaper costs also leads to curve