Economics – The interaction of demand and supply | e-Consult

The market for coffee and coffee machines demonstrates a clear relationship of joint demand, specifically as complements. Coffee machines are necessary to consume coffee at home, therefore the demand for coffee is directly linked to the demand for coffee machines. An increase in the price of coffee machines will lead to a decrease in the demand for coffee, as consumers may postpone purchases or opt for cheaper alternatives. Conversely, a decrease in the price of coffee machines will lead to an increase in the demand for coffee.

Several factors influence the strength of this relationship:

• Income Levels: Higher income levels generally mean consumers are more likely to purchase coffee machines, strengthening the joint demand.
• Lifestyle Trends: A growing trend towards home coffee consumption will strengthen the relationship.
• Availability of Alternatives: If readily available and affordable alternatives to coffee (e.g., tea, energy drinks) exist, the joint demand might be weaker.
• Technological Advancements: The introduction of new, more efficient coffee machine technologies could influence demand.

Diagram:

This diagram illustrates the inverse relationship between the price of coffee machines and the quantity of coffee demanded. The demand curve for coffee is shifted to the left (or right) depending on the price of coffee machines.