Supply and Demand: The Force Behind a Cup of Coffee

Рет қаралды 44,745

Күн бұрын

Supply and demand are the two forces that decide what we produce, buy and consume. Supply refers to the number of things that sellers make at a certain price. Demand refers to how many goods and services consumers buy at a certain price. And if you go out and get a cup of coffee for $3, it's because the two forces met at this price following a phenomenon known as emergent order.
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This video was made with the support of our Patrons: Andrea Basilio Rava, Angela, Ann Hufstader, ArkiTechy, Artur, Badrah, Brilliant Minds Learning, C, Cedric.Wang, Daniel Kramer, Denis Kraus, Digital INnov8ors, Dr. Matthias Müller-Mellin, Duane Bemister, Esther Chiang, Eva Marie Koblin, Floris Devreese, Frari63, Gatsby Dkdc, Ginger, ICH KANN DEUTSCH UND ES WAR EINFACH!, Isabelle, Jana Heinze, Jannes Kroon, Jeffrey Cassianna, Joanne Doyle, Johan Klassen, John Burghardt, Jonathan Schwarz, Jorge Luis Mejia Velazquez, Juliet Hutchings, L Efre, Leonel, Liskaya, Marcel, Marco VanGuff, María, Marq Short, Mathis Nu, Matthias Ruck, Mezes.Macko, Mique XO, Mindozone, Muhammad Humayun, Nicki, Okan Elibol, Paul Hopkins, Peter Bishop, Petra, Raymond Fujioka, Robert Cook, scripz, Sebastian Huaytan Meder, Si, Stefan Gros, Stephen, Stephen Clark, Stuart Bishop, Susan Schuster, Tetiana Gerasymova, Tristan Scifo, Victor Paweletz, Wolfgang Vullhorst, Yohanan Schwartzman, Yvonne Clapham and all the others.Thank you! To join them visit www.patreon.com/sprouts
COLLABORATORS
Script: Jonas Koblin and Jonas Jaquet
Artist: Pascal Gaggelli
Voice: Mithrilda
Coloring: Nalin
Editing: Oran Charoenlap
Sound Design: Miguel Ojeda
Creative Director: Selina Bador
Production Assistant: Bianka
Proofreading: Susan
SOUNDTRACKS
Tarantella - Adieu Adieu
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Watch this documentary on KZfaq to understand how every day, millions of sailors, truck drivers, longshoremen, warehouse workers and delivery drivers keep mountains of goods moving into stores and homes to supply what consumers demand.
Richard McKenzie, the author of Why Popcorn Costs So Much at the Movies, talks with EconTalk host Russ Roberts about a wide range of pricing puzzles.
SOURCES
en.wikipedia.org/wiki/Supply_...
www.econlib.org/library/Topic...
www.investopedia.com/terms/l/...
CLASSROOM EXERCISE
Ask your students to search for a Coffee Price Chart and you’ll find a graph showing the price of coffee in US Dollars. Then ask them to find out:
What’s the price of one kilogram of coffee today?
What do they think are the reasons that have caused the price to fluctuate in the past 5 years?
In addition you may challenge them to search for three coffee shops in the neighborhood that charge their customers different prices. Which one sells their coffee expensive and which one cheap? Was that price really set by the owner of the shop, or is it the result of constant changes in supply and demand - and the final price the phenomenon of an emergent order?
CHAPTER
00:00 Introduction
00:28 The force of coffee price
01:03 Understanding supply and demand
02:58 Influenced factor
04:11 Emergent order
04:33 Quantity demanded vs demand
05:28 Assignment
05:51 Patron's credits
06:00 Ending
#supplydemand #economics #sproutslearning

Пікірлер: 64

@sprouts Жыл бұрын

Support us to make more videos on Economic topic at www.patreon.com/sprouts!

@pyeitme508 Жыл бұрын

@ilzamerson5242 Жыл бұрын

You know what I appreciate much about this channel? The essence of it's lessons works no matter where you from. See, I am from Brazil and the market logic explained by this topic happens here too. So, if you don't mind, I took the liberty to bring data from my country, where coffee is a very consumed drink by people (similar to US). I'm not the type to bring various numbers or statistics. I read and understand a lot of stuff, then produce a report. Expecting to achive the task though. Here it goes. From 2017 to 2020, we had some fluctuations on coffee price due fallings and rises regarding international market, considering that Brazil is the biggest exporter of coffee in the world. In that period, the internal market had increased the consumption a little, not affecting the general coffee price too much. We had a notable price rising in 2020 to 2022 regarding the increased consumption caused by the pandemic and a low harvest of the period. Today, a kg of coffee is around R$ 34, which is 39% higher than the price in 2017. The reason for that rise, among others, seems to be that people lost some control over the consumption of food, including coffee, when under the quarentee. I checked some places to buy coffee and noticed some variations in the prices. Indeed, like pointed by the topic, the variation has to do with the demands of the different locations, allowing the owners some space to choose the sales strategy, which also contributes to a better competition. However, other substantial factors, out of the control of the stablishment owners or the producers, makes the prices go higher, like the rent of the place, which follows a real estate market, and fees the stablishment have to pay to operate in certain areas. This has to do with regulations that does not always acompany the market logic of the topic. I could paste all the reference links related to the informations I gathered here but it does not seen to be necessary due the nature of this commentary section. Thanks for reading. Made with care.

@sprouts Жыл бұрын

Thanks for this excellent response 🙏

@bboyneon92 Жыл бұрын

Mathematically, I need to go through this again and put pen to paper to understand. But, this is a good introduction.

@grapeshott Жыл бұрын

It's not that difficult even

@marym3355 Жыл бұрын

😂 me too

@omarisrael4974 Жыл бұрын

@@grapeshott It is, I understand it at first too but it takes concentration

@omarisrael4974 Жыл бұрын

@@grapeshott It is, I understand it at first too but it takes concentration

@ShawnRavenfire Жыл бұрын

There's another phenomenon where the demand goes up as the price goes up, which can happen sometimes with high-end merchandise. A person who wants to buy diamond jewelry or a rare painting isn't going to waste their time with anything their peers see as cheap. Instead, they'll want to buy the most expensive items for the sake of bragging rights.

@drjp4212 Жыл бұрын

This happens for Apple products, however, it has a maximum point so increasing the price will start decreasing the sells volume.

@sprouts Жыл бұрын

Right! I had this argument with my econ teacher because while in class I also opened a luxury boutique and it seems my customers would buy more if the price was going up… but yes, there are limits

@13thravenpurple94 Жыл бұрын

Great work 🥳 Thank you 💜

@carbonurbuddy3456 Жыл бұрын

Yup this has been a very important aspect through history and the basic of economics

@marcelo.grohmann Жыл бұрын

Great video. Great channel. ☕️☕️☕️

@sprouts Жыл бұрын

Dankeschön

@kolici8246 Жыл бұрын

Great video! Would love to see more economics topics cover here!

@sprouts Жыл бұрын

Thanks 🙏

@farheenfatima5099 4 ай бұрын

That was interesting 😊😊

@alvinfriesen4918 Жыл бұрын

I am just months away from starting my business, thanks for the presentation

@MJPerformance88 2 ай бұрын

Those photos of supply are a graphic that are wonderfully cartooned.

@sprouts 2 ай бұрын

Thanks 🙏🏻

@MJPerformance88 2 ай бұрын

@@sprouts You are welcome.

@pyeitme508 Жыл бұрын

Yep useful

@tshegofatsosekome Жыл бұрын

The official 1000th Liker! Haha, I am now feeling lucky for real. Sprouts rocks by the way, thank you for the content you are putting out. Mwaa!!

@leehayes4019 Жыл бұрын

I'd love to see one on utilities vs the idea of natural monopolies. My friends were just arguing about the issue of infrastructure and free market.

@sprouts Жыл бұрын

We have one on monopoly’s in the making ;)

@denislinehan5581 Жыл бұрын

First rate. Well done! When will 'Sprouts' take a look at The Whorfian Hypothesis' In our day of convoluted economics and politics a look at one of the ways language may be used to manipulate would be a resource for my English Dept. and anyone with a curious mind. Thanks

@lancecoleman7440 Жыл бұрын

depends on total consumer-dollars

@cheungchoiwan6402 Жыл бұрын

I love coffee

@abu-karz Жыл бұрын

Who are those 50 ppl who don't want coffee at $3, srsly!? I mean it's $3, what's with their income?

@Tenchinu Жыл бұрын

that is of course, counting that the coffee shop owner is willing to pay right below minimum wage to his employees, pockets 300% of the profits in ‘bonuses’, and rants angrily on facebook about young people ‘not wanting to work’

@LeviathantheMighty Жыл бұрын

Capitalism is rough, but every other system is infinitely worse.

@jaxkal9596 Жыл бұрын

Tbh, if a businessman can get 300% of the profits he' deserves to get that money lol

@LeviathantheMighty Жыл бұрын

@@jaxkal9596 Heheheheh. If he made 1$ in profit from each cup, then pocketed 3$ in profit from each cup, he'd probably be getting government kickbacks or have some kind of shady deals going on heheheheh.

@drjp4212 Жыл бұрын

"Below minimum wage"?

@MJPerformance88 2 ай бұрын

Market force is predictable by graphing supply and demand.

@AI_ALVAREZ_INTELLIGENCE_AI Жыл бұрын

@artistsometimes2729 Жыл бұрын

There are a number of problems with this scenario, primarily with not stating the assumptions and simplifications or the evidence and real-world scenarios to back up this theoretical model. Whilst it is true that supply, demand and price are all interconnected, it is a gross simplification to assume it falls an immutable law or trend that can be predictable. In reality markets are not efficient, advertising & branding is enormously influential and monopolies can easily bend or break these rules in a real-life scenario. The first statement makes a hash of the concept of scarcity. There are not "unlimited" human wants, unless you are assuming all humans are endlessly greedy. But it is true there is a limited supply and the price mechanism can work as a means of balancing human wants with limited stuff. But more importantly, the goal of suppliers or sellers in a market is to get the highest price possible, to make the most profit possible. Whilst buyers, generally speaking, want to spend the lowest amount possible. A market is simply a set of rules and regulations that determines how these two parties of buyers and sellers, replicated over and over in different areas of the economy, interact and do business. Often however it is that there are not many small buyers and sellers, even 100:1 but infact 1000:1 or even 1000000:1. A few big sellers dominate a marketplace. This illustrates the problem that markets tend towards consolidation, which ultimately renders them inefficient and rent-seeking. Particularly for products that are seen as a daily necessity, as coffee is in the US and tea is in the UK, as well as real necessities like heat, electricity, water a market actor, middleman or seller will try and place themselves in the middle of said transaction and rig the market. This can be done through a variety of measures and was a foundation of the Gilded Age that led to the agrarian populism of the 1870s in the USA and progressive reform leading to the New Deal. Basically, whilst most coffee sellers and producers may be reasonable, conscientious and want a decent price for their customers, in a 'free' (or should I say 'laissez-faire') marketplace, the most ruthless and profit-oriented actor will try and obtain controlling market share. See Amazon with books or Starbucks with coffee. They will then raise the price in the absence of competition, squeezing the wages of workers and gouging their customers in order to make huge profits, which are paid out in executive bonuses and share dividends (mostly held by a tiny proportion of the population, or indeed foreign investors. Often these big sellers do so by using their size to gain an unfair advantage, paying little tax or relying on external capital that competitors don't have access to to keep prices artificially low and bankrupt opponents. However, in a robust, well-regulated market with aggressive antitrust enforcement to protect smaller sellers and strong labour unions, companies have to find ways to produce higher profits without rent-seeking. This leads to investment in productivity improvements, basically making more with less, or the same amount in less time. So if you could harvest coffee more quickly with mechanised machinery or indeed have a more robust crop, less likely to go fallow with poor weather or the plant is transported by ship rather than by air. This is not to mention the enormous value and influence of brands, from Starbucks Coffee to Campbell soups, people tend to by almost exclusively from a name they trust. This has been true since the invention of the self-service supermarket.

@whousa642 Жыл бұрын

childish comment

@Itsmespiv4192 Жыл бұрын

It's fun to see how a primitive system like this It's still praised as infallible and necessary

@jahnavirai9443 Жыл бұрын

😊😊

@Pravin_Yeshua_BTC Жыл бұрын

Awesome!! ✅ Please do Bitcoin next ⚡️& lightning layer please ☺️

@benb3316 Жыл бұрын

I know this is just a generic economics one - and a good one - about RL coffeshops though... I buy roasted coffee beans I grind at home. Plenty of competition there, even the grocery stores compete with luxury suppliers. I used to like coffeshops to sit and read and check my notes - but they are "Come in buy something get out" and the "Baristas" make you wait 20 minutes while they talk with friends in line for deep personal conversations, you count yourself lucky if it doesn't have 1/2 spit content and then if you sit and read or go over notes like a legit Bohemian they keep randomly hitting the "Grind" buttons to annoy and distract you. And no I've never harassed, pestered, etc. and come in nicely dressed and even TIP them, often the only person to do so. Guess its funny when you are white and male to put you down, the only thing they learned in the Debt Factory aka modern college. It's proven because the major chain does NOT use a Mermaid but rather a different aquatic monster of legend but all the "Liberal arts majors" learned after 8 years is to whine about boobs not the symbolism being exactly with how predatory the corporation is.

@Sarcastrich Жыл бұрын

Hey :)

@sprouts Жыл бұрын

Hey!

@pyeitme508 Жыл бұрын

@@sprouts hay

@Sarcastrich Жыл бұрын

@@sprouts what do you think about making a video about William James?

@rawbacon Жыл бұрын

I don't drink coffee.

@LeviathantheMighty Жыл бұрын

Awesome video! Another point with the 'price control' idea is that 'rent control' makes housing unaffordable. Capitalism is rough, but every other system is infinitely worse.

@Menstral Жыл бұрын

I hate coffee and I don't drink coffee

@sprouts Жыл бұрын

🫖?

@myysterio2 Жыл бұрын

Then you study economics and realize that nothing actually makes any sense

@sprouts Жыл бұрын

Haha 😂

@ahmedmasry4450 6 ай бұрын

No, my friend, then you got to study behavioral economics to understand that people are not driven by rationality but with a bunch of systematic mistakes called biases, then it will make sense again, and you will realize that we are not intelligent as much as we think 😊