When experts first predicted major weather-related coffee crop failures in Central and South America in 1986, the price of coffee already on grocery shelves in the United States increased sharply. When coffee became temporarily more scarce, the usefulness to society of "coffee conservation" increased. The immediate sharp price increase (which soon leveled off) gave consumers an incentive to
A) buy all the coffee they could at the higher prices and hoard it, since there was obviously a shortage.
B) drink as much coffee as possible at the higher price.
C) start conserving coffee immediately and switch to other beverages if it was easy to do so.
D) ignore the price of coffee and drink it as they normally would.

Question

Quizplus · Accepted Answer

The increase in price gave consumers a reason to conserve coffee and possibly switch to other beverages if it was convenient for them, rather than continuing to consume it at the same rate regardless of price. Option A, hoarding, was not encouraged by the temporary nature of the shortage, and option B, excessive consumption, would not align with the idea of conservation. Option D, ignoring the price, would not be maximizing utility for the consumer.

When Experts First Predicted Major Weather-Related Coffee Crop Failures in Central