# data[].attributes.body
Ms Pay: Hi Do we respond?

# data[].attributes.body
Please write out the names of the members in the group.
1.Ryan Tan
2.Luke Wang
3.Leam Ming Yao
4.
5.

# data[].attributes.body
Dear Students,

Welcome to Home-Based Learning 2016!

By now, you should have the list of the team members in your group. Each team will analyse 2 articles below to identify 3 evidence/information (2 Demand + 1 Supply or 2 Supply + 1 Demand factors)  to answer the following essay question:

a) With reference to the 2 news articles, explain the fall in prices of coffee beans in Brazil.

To discuss the answers with your group members, double click anywhere on the wall and a virtual "sticky note" will appear at the top. From, enter your name, then you can use the "sticky note" to "chat" with each other.

For example, Miss Lee: I don't think that is a non-price factor that affects demand. Please remember to write your name before the statement :)

Lastly, please identify these non-price determinants of demand & supply by quoting the relevant phrases from the article.

For example, as stated in article 1, "the recession in Europe has hit demand". After quoting the evidence for the article please proceed to explain how this non-price factor affects demand or supply with economic rigour.

I have provided some scaffolding statements to guide you in your essay development. Address each statement by writing the essay segment in the respective sticky note. Press the pencil button to write the respective essay segment.

# data[].attributes.headline
Topic: Demand, Supply & Market Equilibrium

# data[].attributes.subject
Topic: Demand, Supply & Market Equilibrium

# data[].attributes.body
Objective - Students will be able to identify and explain how the demand and supply factors affect the market for coffee beans.

# data[].attributes.headline
With reference to the 2 news articles,  explain the fall in prices of coffee beans in Brazil.

# data[].attributes.subject
With reference to the 2 news articles,  explain the fall in prices of coffee beans in Brazil.

# data[].attributes.attachment_link.readable_text
COFFEE has many devoted drinkers. Its appealling aroma and caffeinated kick mean that 83% of all American adults drink it, 63% of them on a daily basis, according to a survey from the National Coffee Association. Yet despite the strong demand for coffee, some suppliers are unhappy. In Brazil, which produces a third of the world's coffee beans, farmers are striking over falling prices and burning sacks of coffee in protest. Why are coffee-growers feeling the strain?

There are two main varieties of coffee bean: arabica and robusta. The former, which accounts for around 60% of the world's crop, is considered superior and fetches higher prices; the latter is a hardier crop, resistant to leaf rust, but has a more bitter taste. Most of the beans produced in Brazil are of the arabica variety. But these beans now fetch around $106 a 60kg bag, less than half of what farmers could get for them a couple of years ago. Farmers in Colombia and Ethiopia, who also produce arabica beans, are suffering too. The reason is that production of coffee, and of cheaper robusta beans in particular, is booming. Vietnam has gone from growing almost nothing a decade ago to producing 25m bags of robusta beans a year today. The result is an oversupply of coffee.
Get our daily newsletter
This hurts producers of arabica in particular, for several reasons. First, consumption in the developed world-American, European and Japanese drinkers consume more than half the world's coffee-is flat, and the recession has squeezed the profits of big food companies such as Nestlé and Kraft. They have taken to blending cheaper robusta beans into their products to maintain their margins, causing the price of robusta to fall more slowly than that of arabica. In the developing countries such as China, Indonesia and Brazil, meanwhile, where the emerging middle classes are discovering the joys of coffee and the market is growing by around 5% a year, robusta is the bean of choice. To make matters worse for arabica growers, falling prices have been accompanied by rising costs: coffee is still largely picked by hand, and wages are rising fast in Brazil and Colombia. Many Brazilian and Colombian farmers invested to boost production of arabica in response to the high prices of 2011, which has added to the oversupply and further depressed prices. And good weather in Brazil means that this year's crop has turned out to be unexpectedly large. That is why Brazil's farmers are striking, and are demanding more protection, in the form of fatter subsidies, from the state.

Farmers who grow arabica beans tend to be specialists, and do not plant other sorts of crops (which is the usual way for farmers to insulate themselves from volatile prices for a particular crop). Prices for sugar cane, a potential alternative, are also low. Aficionados' demand for the fanciest coffees, which fetch higher prices, is healthy, but for farmers to move upmarket takes time and expertise. Indeed, discerning coffee drinkers are also feeling the pinch, because the Central American countries where the finest coffee is grown, including Guatemala, Nicaragua and El Salvador, have been hit by leaf rust, which could wipe out 30% of this year's crop. So even while arabica beans fetch low prices on commodity markets, the price of the fanciest beans is going up. A storm in a teacup it ain't.

# data[].attributes.attachment_link.description
COFFEE has many devoted drinkers. Its appealling aroma and caffeinated kick mean that 83% of all American adults drink it, 63% of them on a daily basis, according to a survey from the National Coffee Association. Yet despite the strong demand for coffee, some suppliers are unhappy.

# data[].attributes.body
Explain market mechanism:
Market mechanism refers to the use of money exchanged by buyers and sellers with an open and understood system of value and time trade-offs to produce the best distribution of goods and services.

Define demand:
Demand is the amount of consumers who are able and willing to buy a particular good,

Define supply:
The total amount of a specific good that is available to consumers

# data[].attributes.body
It is at equilibrium at point E1, where the price is at P1 and the quantity is at Q1.

# data[].attributes.headline
Body: Decide the direction and magnitude in which the curves shift

# data[].attributes.subject
Body: Decide the direction and magnitude in which the curves shift

# data[].attributes.body
Demand curve of arabarica beans shift to the left, whereas their supply curve also shifts to the right at a smaller extent.  Demand curve for Robusta shifts to the right, whereas the supply curve of Robusta shifts to the right too at a greater extent. As such, the demand curve for coffee beans overall shifted slightly to the right, whereas the supply curve for them overall shifted to the right at a greater extent

# data[].attributes.headline
Body: Identify and explain whether the factor/event shifts the demand or supply curve. (2 Demand + 1 Supply or 2 Supply + 1 Demand)

# data[].attributes.subject
Body: Identify and explain whether the factor/event shifts the demand or supply curve. (2 Demand + 1 Supply or 2 Supply + 1 Demand)

# data[].attributes.body
The demand for arabarica beans drop due to the lower purchasing power of the consumers due to a recession, as seen in the 'traditional market of their wares is saturated', with 'growth in Europe, America and Japan bring flat', and because the 'recession in Europe has hit demand and squeezed profits for roasters'.
The supply of arabarica beans has risen to a smaller extent because there were higher production, with 'Many Brazillian and Colombian farmers invested to boost production of arabarica in response to the high prices of 2011, which has added to the oversupply', even though the higher production was limited because of rising cost of production, with wages in Brazil and Colombia 'rising fast and production costs above prices'. This is likely to lower the supply of arabarica beans, but is still lesser than the magnitude of the rise in the production of arabarica beans.
The demand for robusta beans, however, is expected to increase, due to the growing number of consumers. This can be seen in 'In places like China, Indonesia and Brazil itself, where coffee is an affordable luxury for the middle class, the market for coffee is growing by around 5% a year', with 'these drinkers filling their pots with cheaper robusta beans' and as such, '40% of the world's coffee crop is now robusta beans'. This increase in demand for robusta coffee beans have caused the overall demand of coffee beans to increase, shifting the overall demand curve to the right slightly.
The supply for robusta beans is also increasing, as there are higher production of robusta beans. This can be seen in 'Vietnam has gone from growing almost nothing a decade ago to producing 25m bags of robusta beans a year today. The result is an oversupply of beans.' as the supply of robusta beans increased by a lot. This leads to an increase in the supply of robusta beans, and as such, also leads to an increase in the supply of coffee beans overall, shifting the overall supply curve of coffee beans to the right.

# data[].attributes.headline
Body: Using the market adjustment process, explain how the shift(s) changes the
equilibrium price and quantity (Explanation of diagram):

# data[].attributes.subject
Body: Using the market adjustment process, explain how the shift(s) changes the
equilibrium price and quantity (Explanation of diagram):

# data[].attributes.body
Note: Please draw the diagram manually, take a photo and upload it by clicking the "video icon".

# data[].attributes.body
At original price p1, the quantity demanded is at qd and the quantity supplied is at qs, leading to the surplus of coffee beans being (qs-qd)units. As such, through the market mechanism, there is a downward pressure on price, and with the price dropping, the quantity demanded will increase while the quantity supplied will decrease, until eventually, at equlibrium price e2, the average price of coffee beans is at p2, and the quantity of the coffee beans is at q2.

# data[].attributes.body
When the demand curve and the supply curve of coffee shift rightwards, with the demand curve shifting less than the supply curve, the quantity will increase, whereas the price will decrease. However, if the supply curve shifts to the right less than the demand curve, the quantity would still increase, but the price would increase as there would be a shortage in supply instead of a surplus. This is for the overall coffee bean market, whereas for the arabarica beans, the demand has dropped while the supply has increased slightly, causing a surplus which has a magnitude big enough for the price to drop further than the average price of the market while the quantity decrease due to limited consumers purchasing it. Whereas for the robusta beans, while the demand has increased, the supply has increased to a point that there is an oversupply of robusta coffee beans. As a result, there is a surplus of robusta coffee beans too, which leads to the price dropping too whereas the quantity increase.

In the end, when the demand curve and the supply curve of coffee shift rightwards, with the demand curve shifting less than the supply curve, the price will decrease. This is the reason why there is a fall in prices of coffee beans in Brazil.