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The relationship typically is that a decrease in supply will result in an increase in price. In this case, there is a rational explanation for the decrease in prices at the same time as the decrease in supply. New housing starts are a lagging indicator. Housing prices will typically begin to fall before new housing starts. Therefore, the two can fall at the same time, but the relationship is not as implied in the true or false proposition.
3. a) a blight killing off the Brazilian crop would result in a decrease in global coffee supply. Demand would remain unchanged. Therefore, coffee would be subject to an increase in price.
A b) a change in the price of tea may or may not impact the global coffee market. In some markets, they are substitutes but in many countries consumption is dominated by one or the other.
Thus, there is little correlation between the global tea and coffee markets, and none could be expected unless one of those markets completely collapsed.
A c) the labor situation would likely result in an increase in the...
The coffee market is only somewhat price sensitive, however, due to the strong habitual consumption of the drink. As a result, there will only be a minor decline in demand for coffee.
A d) if coffee was shown to cause cancer, demand for coffee can be expected to decline significantly. This would result in a steep reduction in price and production for coffee worldwide. The coffee that remains in production will be on the world market at a lower price than before the cancer announcement.
A e) if coffee prices are expected to rise rapidly in the near future, demand in the present would be expected to increase, as buyers attempt to stockpile supply at today's lower price. This will drive up the price, which could compound the expected price increase.
Demand may also decrease, in particular after the initial stockpiling. If the price of coffee increases rapidly, consumers may reduce consumption or move to substitutes. However, there is an element of price inelasticity to coffee demand so it would take a substantial…
Opportunity Costs How a college education increases one's human capital It is a universal belief that a more educated workforce leads to an incredible human capital. Therefore, the thought of retaining higher educated graduates is important towards regions and cities maintaining competition among themselves. This eventually leads to technological and economic growth. While there has been a compilation of data from many regions and states in educational achievement, there also exist relentless
In the end, those new highways will be just as congested as the current ones. This option appears to fill the benefits of both the stadium and the education options, at least in the short run. The long-run benefits of more highways are questionable, whereas the long-run benefits of better education are not. The no new taxes option argues that by keeping taxes low. There are some perceived benefits of
" (Kee, 2001, p. 139) To further this discussion of short- and long-term production and cost one must at least briefly understand the just-in-time model. This model was developed by the Toyota Motor Corporation to mirror the ability of certain suppliers to provide just the amount of a product that a market demanded at the time it was demanded. To apply this model to manufacturing one must have a careful set
Obviously, the concept of opportunity cost is very useful for making decisions (Mankiw, 2008) because at the end of the fiscal year, the person who chose to vacation for five days in Costa Rica would have $1,700 less in his or her bank account that the person who chose to stay home and work instead of going to Costa Rica. Without considering opportunity costs, a person could make the
Brick and mortar universities offer attractive networking opportunities for students that are not as easily utilized online. Of course, it might be argued by a dedicated University of Phoenix student that the experience of working while attending classes is just as valuable as being a member of a university lacrosse team, university newspaper, or debate team. Furthermore, the maturity and responsibility of juggling work and school can be beneficial, and
Human Capital - Opportunity Cost "Human Capital." Gary S. Becker. Human Capital. 1975. The Library of Economics and Liberty web site: (http://www.econlib.org/library/Enc/HumanCapital.html). Purpose of Article: Gary Becker's article establishes that investment in human capital through education and training leads to increases in the standard of living and overall productivity of both the economy and the individual. At the individual level, Becker uses the concept of opportunity cost to analyse the trends in higher