The Specialty Coffee Market

Paper Summary:

The paper discusses the economic fundamentals of the law of supply and demand as well as of perfect competition to explore current and future economic dynamics in the specialty coffee market. The paper relates that demand for specialty coffees has experienced growth for some time, but suppliers are not receiving the expected increase in price because there is excess supply. The paper discusses how suppliers are turning to fair trade market agreements to get a better price, but points out that ultimately, production will have to adjust to the market realities of perfect competition where there would be production cutbacks and/or market exits.

Outline:
Introduction
Economic Theory
Demand in the Specialty Coffee Market
Supply in the Specialty Coffee Market
Conclusion

From the Paper:

"The laws of supply and demand are the most important determinant of market structures (Economics basics: demand and supply). The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good and vice versa. The law of supply states that when the price of a good rises, holding other factors constant, producers will be willing to supply more of the product. Price, therefore, is determined by supply and demand. Economic equilibrium refers to a point where a market for a product has attained the price where the amount supplied of a certain product equals the quantity demanded."

Sample of Sources Used:

• 2005 tea and coffee industry forecast. http://www.teaandcoffee.net/1204/special.htm
• Baker, S.L. (2003). Supply and demand. http://hspm.sph.sc.edu/COURSES/ECON/SD/SD.html
• Coffee Holding Company, Inc. reports third quarter earnings. (2005, September 15). Market Wire. http://www.findarticles.com/p/search?qt=%22little+seasonality+in+the+coffee%22&qf=all&qta=1&tb=art&x=0&y=0
• Dize, S. (2006, June 21). McDonald's specialty coffee. http://www.associatedcontent.com/article/39107/mcdonalds_specialty_coffee.html
• Economic basics: demand and supply. Investopedia. http://www.investopedia.com/university/economics/economics3.asp

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