Question

INSTRUCTIONS: Using appropriate economics concepts and theories, give concise but substantial discussions on the requirements below. The Coffee Glut in Brazil A very large crop of coffee in Brazil, the world's leading coffee bean grower, as well as in other countries, caused a steep decline in the price of coffee in the year 2016. Brazil attempted to decrease the supply of coffee by using a "global retention scheme." Brazil was going to keep more than 2 million bags (at 60 kilograms per bag) off the market. However, this plan collapsed in September 2016 when other coffee-producing countries refused to cooperate. In November, Brazil's policy makers planned to introduce another program, under which the government would finance 70% of the value of coffee that producers would hold back for a year. One of the problems that producers in Brazil face is the rather low productivity and thus high cost of coffee production. According to one authority, "at current prices, the breakeven point is at 45 bags per hectare (2.471 acres) but in the past year, productivity has averaged 17 bags around here." Many coffee producers have had to seek alternative products, such as soybeans, passion fruit, and grains. It has also been estimated that 10% of the coffee-growing area has been abandoned since the end of the year 2015, and it is expected that additional land will be left idle by 2017 harvest time

1. Identify two big economics issues in the case. Make a normative and positive analysis. (20 points)

2.Suggest how to solve the issues identified.( 20 points)

Answer 1

辿44 hod OLか。 et ana