Demand

Change in quantity demand is a movement along the demand curve to a new point when there is a change in price. Law of Demand is the quantity of a good per period of time will fall as price rises and will rise as price falls, other things being equal (centeris peribus).


Referring to Graph 4, the original price of lattes is at P1 and the original quantity demanded of lattes is at Q1. A New York Starbucks increased the price of lattes by ten cents at 25th of June, 2013 (Bloomberg Businessweek, 2013). The price of lattes has increased to P2 and the quantity demanded of lattes has decreased to Q2.

Graph 4: The Movement along the Demand Curve (2012)

Change is demand is a shift of demand curve when a determinant of demand other than price changes.

According to Luis Genaro Munoz, chief executive of Columbia(the second largest producer of mild Arabica coffee), coffee drinkers from Brazil to Asia are increasing consumption and willing to pay more for high-quality coffee (Bloomberg, 2011). As Starbucks is providing the good quality coffee, demand has increases for high-quality coffee. Since there is an increase for demand, the demand curve should shift outward from D0 to D1 at Graph 5.

Graph 5: The Shift of Demand Curve (2013)