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Suppose That the Market for Coffee Is in Equilibrium at a Price

question 297

Essay

Suppose that the market for coffee is in equilibrium at a price of $9.50 per pound and a monthly quantity of 20 million pounds. News of a drought in Brazil arrives so that people know that the supply of coffee months from now will be sharply reduced. What, if anything, will happen in the coffee market now? Explain.


Definitions:

Actual Input

The real, measured input into a process, system, or activity, as opposed to theoretical or estimated input.

Actual Output

The real quantity of goods or services produced by a company or a production process.

Change in Backlog

The variation in the quantity of unfulfilled orders or processes that are yet to be completed over a period of time.

Assignment Method

A mathematical technique used for allocating resources or tasks to recipients or locations in an optimal way.

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