SUPPLY AND DEMAND FROM A MICROECONOMICS PERSPECTIVE

Supply and demand of coffee from a microeconomics perspective

Supply and demand of coffee from a microeconomics perspective

The availability of substitutes

The most popular substitute of coffee is tea. The availability of tea influences the price elasticity of coffee. This means that people can switch to tea if there is any increase in the price of coffee.

The specific nature of the good

Coffee in general enjoys a loyal following. People who prefer coffee usually do not switch easily to substitutes. Thus the price elasticity of demand for coffee remains stable.

The part of income spent on the good

The ...