Using the data in Extract E, draw a demand and supply diagram to show the likely effects of the estimated change in population for the 40–59 age group on the USA coffee market. - Edexcel - A-Level Business - Question 2 - 2019 - Paper 1
Question 2
Using the data in Extract E, draw a demand and supply diagram to show the likely effects of the estimated change in population for the 40–59 age group on the USA cof... show full transcript
Worked Solution & Example Answer:Using the data in Extract E, draw a demand and supply diagram to show the likely effects of the estimated change in population for the 40–59 age group on the USA coffee market. - Edexcel - A-Level Business - Question 2 - 2019 - Paper 1
Step 1
Draw the Demand and Supply Diagram
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Answer
Start by sketching the axes of the diagram. The vertical axis should be labeled 'Price', and the horizontal axis should be labeled 'Quantity'. Next, draw the initial demand curve (D) and supply curve (S) intersecting at an equilibrium point (E).
Step 2
Shift in Demand Curve
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Answer
Given that the population estimate for the 40-59 age group shows a decrease (from the table in Extract E), we anticipate a reduction in demand for coffee among this demographic. Therefore, shift the demand curve leftward to reflect the decrease in demand.
Step 3
Label New Equilibrium
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Answer
Identify and label the new equilibrium point (E1) where the new demand curve (D1) intersects the supply curve (S). Also, mark the new equilibrium price (P1) and quantity (Q1) on the axes.
Step 4
Analysis of Effects
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Answer
The leftward shift of the demand curve illustrates that at every price point, the quantity demanded for coffee has decreased due to the population change. Consequently, this is expected to lower the equilibrium price and quantity in the USA coffee market.
