"Using demand and supply diagrams explain recent changes in the price in coffee"

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Scot Varley 1.36        Economics        06/05/2007

Economics

“Using demand and supply diagrams explain recent changes in the price in coffee”

Introduction

 A market exists wherever there are buyers an sellers of a particular good. Buyers demand goods from the market whilst sellers supply goods onto the market. Demand is the quantity of goods or services that will be bought at any given price over a period of time. The demand curve is downward sloping, showing that the lower the price, the higher will be the quantity demanded of a good.

                                        

                                        Demand curve

                                        

Supply in economics is defined as the quantity of goods that sellers are prepared to sell at any given price over a period of time. The supply curve is upward sloping, showing that firms increase production of a good as its price increases. This is because a higher price enables firms to make profit on the increased output whereas at the lower price they would have made a loss on it.

                                        Supply curve

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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If in a market there is more supply than demand there is then a surplus of this good. A rise in the price of this good leads to a rise in the quantity supplied shown by a movement along the supply curve. The change in supply can be caused by a change in production costs, technology and the price of other goods. At a lower price some firms will cut back on relatively unprofitable production whereas others will stop production altogether. The demand for a good will rise or fall if there are changes in factors such as incomes, the ...

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Here's what a star student thought of this essay

The essay is structured well, having a clear introduction and conclusion. I like how the introduction defines the terms in the question, showing a good foundation of knowledge. The conclusion draws upon the analysis and poses an evaluative statement, showing the ability to make a conclusion based on evidence. It's always good to see significance explored! Spelling, punctuation and grammar are strong.

The analysis in this essay is sound. The explanation of a market is good, with an awareness of supply and demand. If I were doing this essay, I would've mentioned that where supply and demand meet is the market equilibrium, determining the price and quantity. This would've added clarity. I like how the diagrams are shown with a shift. When drawing diagrams in economics, always think of a shift you can draw. By doing so, you are automatically showing understanding of the model. This essay is missing a simple few sentences detailing what the diagram is representing, however. I would've written something like "The shift from D1 to D2, and S1 to S2 has caused equilibrium price to decrease from P1 to P2 and quantity to increase from Q1 to Q2. I liked how they noted that the shift in supply is larger than the shift in demand, as this shows understanding that the effect depends upon the size of the changes. I see this essay was submitted in 2004, but if it was more recent, I would've looked at how global recession has caused a vast decrease in demand, yet supply is still rising.

This essay engages well with the question. It has a good introduction defining a market, and uses diagrammatical analysis strongly to show why shifts in demand and supply will cause a change in the equilibrium. If this essay wanted to go further, it could look at why developing countries tend to export products such as coffee and what effect the decreasing value is having on them. Also, an exploration of FairTrade would be something else which could be insightful.