Four students from your economics class are sitting in a localrestaurant discuss

Question

Four students from your economics class are sitting in a localrestaurant discussing the market for coffee. Below are quotes fromeach of the four students. All of the following quotes arelogically correct except one. Which quote indicates incorrecteconomic analysis?

Tasha: "If coffee drinkers expect the price of coffee to rise nextmonth, then current demand will go up and lead to a price increasethis month."

Kendra: "If the price of caffeinated soft drinks such as MountainDew went down, then consumer demand for coffee would go down sincethey're substitutes for each other."

Sergei: "If the demand for coffee were to increase, then I wouldexpect the price to rise, which would then cause the demand to fallback down to its original level."

Nicholas: "If Brazil is hit hard by such a severe freeze that halfof its crop is wiped out, then the price of coffee will probablyrise."



Nicholas: "If Brazil is hit hard by such a severe freeze that halfof its crop is wiped out, then the price of coffee will probablyrise."

Explanation / Answer

The Incorrect economic analysisindicates: Sergei: "If the demand for coffee wereto increase, then i would expect the price to rise, which wouldthen cause the demad to fall back down to its originallevel". Hope it may help you

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