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Name:
Date:
Period:
APE Unit 2: UFRQ Demand, Supply and Prices
Directions: Complete the following tasks to the best of your ability. Complete your FRQ on a separate sheet of paper and staple it to
this one. Each part is worth 5 points for a total of 10 possible points.
Part I
Assume that coffee is sold in a competitive market in which demand is relatively inelastic and supply is relatively elastic.
A) Draw a correctly labeled graph of the coffee market. On your graph show the equilibrium price and quantity of coffee,
labeled PE and QE.
B) Suppose the government imposes a price ceiling on the market for coffee. On your graph from part A), show each of the
following after the tax is imposed.
 The price ceiling, label PC
 The price buyers are willing to pay, labeled PB
 The price sellers are willing to sell at, labeled PS
 The economic condition that is going to take place:
C) Will the tax burden fall entirely on buyers, entirely on sellers, more on buyers and less on sellers, more on sellers and less on
buyers, or equally on buyers and sellers? Explain.
Part II
Read the following article about economics. Use this article to create a FRQ for Unit 1. Your FRQ must contain the following
information:
 Three action verbs to perform three specific tasks that are connected to the article and the political cartoon
 Five vocabulary terms from Unit 1 that are used in context and underlined
 Must include one graph that is based on a production possibilities frontier
 Must contain the responses to stated questions/graph
Americans’ Coffee Guzzling Is Pushing Bean Prices Higher
Laura Lorenzetti
Updated: Jul 01, 2016 8:54 AM Pacific
U.S. coffee drinkers are consuming more of the brew than ever, helping to send global coffee consumption to an all-time high and
sending prices for the beans soaring.
World demand for coffee beans is poised to hit a record this year as people around the world are consuming more of the beverage,
and Americans are leading the way. Global coffee consumption is expected to grow 1.2% over the next year starting in October, and
American consumption is expected to be up 1.5% this year alone, reported Bloomberg. Coffee has also reached peak popularity in China,
Japan, and India, which are expected to demand more java than ever locally.
"With the U.S. being the largest consumer, any demand growth there will create massive changes to the demand-supply balance," Harish
Sundaresh, a portfolio manager and commodities analyst for Loomis Sayles, told Bloomberg.
The high demand is leading to higher prices for the coffee beans. The price for Arabica-coffee futures was up 20% in June, marking the
biggest monthly gain since February 2014. Arabica-coffee futures now go for about $1.4565 per pound, and Citigroup estimates that
prices could reach $1.50 by the second half of 2017. Prices for Robusta coffee beans, which are used in instant coffee, are also up,
gaining 4.2% last month.
On top of that, some coffee plantations
haven't had a great year in Brazil, which
could restrict supply and put even more
upward price pressure on Robusta beans.
Coffee stockpiles have also been
dwindling in the wake of increased global
consumption. Warehouses monitored by
the International Coffee Organization
have seen their stores drop for 11 straight
quarters. That kind of streak hasn't been
seen since 1995, when ICE started
collecting data on coffee stockpiles.
"Between tight supply, potentially
detrimental weather, and extremely strong
global demand, especially emanating form
the U.S., China, and India, that will
continue to tighten coffee markets," said
Sundaresh.
Source: http://fortune.com/2016/07/01/americanscoffee-prices/