Sample Marketing Essay Paper on Microeconomics

Introduction

Indeed, coffee products are some of the most widely consumed beverages globally with massive customer bases and revenue generation potential. Thus, the report gives an accurate analysis of the global coffee industry based on diverse microeconomic principles. For instance, the report uses the concepts of PPF and opportunity cost to accurately analyze varied changes in the global production of pour over coffee. Moreover, different microeconomic concepts such as demand and supply, market equilibrium and utility are used to further analyze the international coffee industry.

Analysis

Analysis 1: The production of coffee using a pour over French press style   

(Topic 1: PPF and Opportunity Cost)

Source: https://treescoffee.com/blog/2016/04/6-popular-methods-for-brewing-coffee-at-home/

Summary

The article describes different procedures that are involved in the manual production of dissimilar flavors of coffee. Specifically, the articles examine the various costs involved in the production of coffee coupled with related requirements that include labor, ingredients and equipment costs. According to the article, there are numerous reasonable factors that must be taken into consideration when making decisions to brew coffee using the stipulated procedures.

Analysis

While pour over is the oldest, most prompt and cheapest way of brewing coffee, French press style brews far much superior and consistent coffee. In particular, unlike pour-over style, French press can be used to extract superior flavors from coffee beans. Therefore, if a consumer or producer decides to reallocate resources towards the production of coffee using the French press method, fewer resources will automatically be directed toward the application of alternative methods. Therefore, there will be fewer cups of coffee produced using a pour over method when the French press style is chosen.

Economic diagrams

 

Table 1: Production possibilities of coffee using different styles

Source: Author’s own compilations

Figure 1: The PPF for the production of coffee using different methods

Source: Author’s own compilations

From figure 1 above, an extra cup of coffee using the French press method implies a larger opportunity cost and less production of coffee cups using the pour over method. As such, from the PPF curve, more production of coffee cups using French press implies that the company has to stop production of more cups using a pour over method to free pertinent resources.

Analysis 2: Increased supply of coffee supply in the global market

(Topic 2: Demand and supply)

Source: https://unctad.org/meetings/en/Presentation/MYEM2018_Christoph%20Saenger_25042018.pdf

Summary

The article affirms that coffee which remains to be one of the most widely traded products worldwide is characterized by price volatilities and this has affected the demand and supply of the commodity. The article further examines the present condition of the global coffee market that includes the rising demand and supply of the commodity.

Analysis

Presently, more people are willing to purchase quality and consistent coffee at the prevailing market prices. There is an increased demand for coffee worldwide especially in countries with a large population such as China and India. Despite the increased demand for coffee products, there is a significant reduction in the supply of the commodity given the decreased production from traditional market leaders. As such, based on the law of supply and demand, the relatively low supply of coffee and increased demand for the product has resulted in increased prices (Bernanke, Antonovics & Frank, 3).

Economic diagrams

 

Figure 2: The global supply of coffee

Source: Author’s own compilations

From the figure above, increased prices of coffee as a result of increased demand will subsequently result in an increase in the supply of the same commodity.

Analysis 3: Increase in the global coffee market share  

(Topic 3: Market Equilibrium)

Source: https://www.mordorintelligence.com/industry-reports/coffee-market

Summary

The article provides an insight into the market share of the coffee industry in the United States, Germany and other parts of the world. Specifically, the article analyses different factors that affect the global demand and supply of coffee in the identified markets. For instance, the article points at the increased number of food chains and climate changes as some of the forces driving the growth and market share of the global coffee industry.

Analysis

When the supply and demand curves of coffee intersect, the market is then assumed to be in equilibrium. At this point, the quantity demand and quantity supplied for coffee products are perceived to be equal. For instance, the rising demand for coffee as a result of climatic changes among other crucial factors implies an increase in prices and the subsequent motivation to supply more of the same product.

Economic diagram

Figure 3: The equilibrium market for coffee

Source: Author’s own compilations

From the figure above, at P* the demand and supply of coffee are at equilibrium. Any change, for instance, to P**will destabilize the equilibrium condition and affect both the quantity demanded and supplied.

Analysis 4: Premium pricing for global coffee products

(Topic 4: Inelastic Demand and Increased Total Revenue)

Source: Lewin, Giovannucci & Varangis (2004)

Summary

The article examines the global production trends and pricing of coffee in different parts of the world. Specifically, the article illustrates the common contemporary problems that are facing the coffee markets especially after the price fluctuations after the global financial depressions.

Analysis

In microeconomics, total revenue of a particular product can be used to establish whether the demand is elastic or inelastic (Hall & Lieberman, 12). For instance, if the projected increase in price results in a subsequent increase in aggregate revenue, then the demand is assumed to be inelastic. From the article, the increase in coffee prices has no significant impact on the ensuing quantity demanded.

Economic diagrams

The diagrams below are used to illustrate the inelastic demand and increased total revenue of coffee products in the global markets.

 

Table 2: Premium pricing for certain coffee products

Source: Author’s own compilations

From the table above, at price 9, the projected demand at 1 will result in a reduction in total revenue and this implies that the demand for coffee products is elastic. However, at price 4, the quantity demanded increases to 6 and the total revenue increases to 24 resulting in an inelastic demand.

Figure 4: Premium pricing for certain coffee products

Source: Author’s own compilations

From the figure above, the subsequent increase in coffee price resulting in an increase in total revenue means that the demand for the commodity is inelastic and vice versa.

2.5 Analysis 5: Higher value and premium status of global coffee products

(Topic 5: Utility)

Source: Niemi (2009)

Summary

The article examines various types of utility that are associated with the consumption of coffee products. For instance, the article examines the supplementary and functional utility among other related functions that dictate the prices and quality of coffee products.

Analysis

The utility function is used to measure the amount of perceived level of satisfaction that consumers get from using certain products (Baumol & Blinder, 15). Most coffee consumers attach much importance to the price, taste, and quality of coffee in the global markets. Specifically, in microeconomics, utility refers to the subjective evaluation of well coffee products satisfies the insatiable wants of the consumers. For illustration purposes, the following figure will be used to demonstrate the level of utility that consumers derived from the consumption of coffee.

Economic diagrams

Figure 5: Utility of coffee

Source: Author’s own compilations

From the figure above, coffee consumers gain additional satisfaction from the consumption of extra units of the commodity. This implies that coffee consumers are more likely to buy more of the related communities.

Conclusion

In general, the report has provided clear analyses of the selected articles based on the stipulated economic concepts. The report further ascertains that the microeconomic concept of demand and supply can be used to successfully predict the future trends of prices and quantity in the global coffee market. Overall, the report has exposed me to different dynamics facing the global coffee market using specific microeconomic concept and principles.

 

 

Work Cited

Baumol, William J., and Alan S. Blinder. Microeconomics: Principles and policy. Nelson Education, 2015.

Bernanke, Ben, Kate Antonovics, and Robert Frank. Principles of macroeconomics. McGraw-Hill Higher Education, 2015.

Hall, Robert E., and Marc Lieberman. Microeconomics: Principles and applications. Cengage Learning, 2012.

Lewin, Bryan, Daniele Giovannucci, and Panos Varangis. “Coffee markets: new paradigms in global supply and demand.” (2004).

Niemi, Niina. “The price elasticity of demand of Fair Trade coffee.” (2009).