Case 3.

2 Air Travel: Buy High Sell Low

Syndicate 2
 Airlines Market (t=0)
Price S0

D0
Existing Condition

E0 This the normal condition

P0
before 1970 (deregulation era)

Q0 Supply/Demand
 Airlines Market (t=1)
Price S0

D0
Change in Supply Condition
S1

E0 In 1970 there was policy to

P0
open airlines industry to
new players.
Q1

Q0 Q1 Supply/Demand
 Airlines Market (t=2)
Price S0 Changes in Demand
D0 Behavior

S1
• 9/11 incident
E0 • Economic Recession
D1

Q1 E1 This has impacted into

Q2
lower demand of people
E2 using airlines

Q2 Q1 Supply/Demand
Case 3.1 Coffe: Buy Low Sell High
Syndicate 2
 Coffee Commodity Market
S 2 Under supply

Price S0
The case of Coffee
D0 market is always in the
controlling of Supply.
S 1 Oversupply
The changes in supply
E0 has changed the Eq
P0 Price of Supply-
Q1
Demand, whether is
oversupply (lower
price) or undersupply
(higher price)
Q0 Q1 Supply/Demand
 Demand of Starbucks

P2 D1

P1
D2

Inelastics
Though the price is increase quantity is the same
Coffee: Buy Low Sell High
• overproduction in the international coffee market caused the price of
coffee to drop below production costs.
• Part of problem was the usual cyclical swings in price caused by the
movements of supply and demand.
• There is often a tendency for supply to overshift to the right, causing
prices to plummet.
• While coffee prices kept falling, specialty coffee retailers such as
Starbucks were charging its customers $3.50 for a "tall skinny latte.“
• Starbucks buys low in the depressed wholesale market and sells high
in the differentiated specialry retail market.
 Bluefin Tuna Commodity Market
Price S 1 Restriction Stock The case of Bluefin Tuna
D0 market is always in the
S 0 Normal Stock controlling of Quantity. The
D1 quantity was drop
P1 significantly, the Eq Price of
E0 Supply-Demand, whether
P0 Normal Stock (S1) is premium
price or Restriction Stock (S0)
is more expensive price, so
people were difficult to buy
the products
Q1 Q0
Supply/Demand