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:

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.

With reference to the first article "Worse still for arabica producers, the recession in Europe has hit demand and squeezed profits for roasters. These processors, including big food firms such as Nestlé and Kraft, have responded by blending cheaper robusta with arabica." shows that the recession in Europe resulted in big food firms earning less profit. As robusta and arabica are very close substitutes, such firms are switching to buying more robusta due to its lower price. This results in a lower demand for arabica, causing a leftward shift of the demand curve for arabica, ceteris paribus.

From article 2 "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 the good weather in Brazil means that this year's crop has turned out to be unexpectedly large." shows that the cost of production of arabica has been rising due to its dependence on human labour where wages are rising. Also, there an oversupply of arabica as more farmers are growing it due to its increase in price a few years back and the good weather in brazil which favours the growth of arabica. This leads to an increase in the supply of arabica, causing the supply curve for arabica to shift rightwards, ceteris paribus.

Initially, the demand and supply curves for arabica interact at an equilibrium point E1 with price P1 and quantity Q1. After the leftward shift of the demand curve and rightward shift of the supply curve, there is a surplus of arabica coffee beans QdQs. As a result, there is a downward pressure on the price of arabica. The price of arabica decreases from P1 to P2. During the market adjusting process, the demand for arabica increases and supply decreases, the surplus of arabica is gradually cleared. The market adjustment process continues until a new equilibrium point E2 is achieved with price P2 and quantity Q2.