A cup of coffee inside the Denver airport often costs significantly more than an
ID: 1136613 • Letter: A
Question
A cup of coffee inside the Denver airport often costs significantly more than an identical cup at the gas station just outside the airport. Using similar critical thinking as that presented in RWM 2.5 The Airfare Mystery, discuss the potential influences impacting supply and demand for a cup of coffee in this situation. Be sure to “delve deeper” and discuss at least 2 impacts on the supply side and 2 impacts on the demand side that could help explain this difference in market prices for a cup of coffee.
Explanation / Answer
Ans
2 supply side factors are
The suppliers at airport are limited thus reducing competition
The rent etc charged by airport authorities to shops at airport are quite high
The demand side factors are
Usually high income earners visit airport which are willing to spend more on food
Due to rush at airport demand for coffee is high.