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Negative Externalities - Starbucks

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by

Karann Agarwal

on 6 January 2014

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Transcript of Negative Externalities - Starbucks

HOWEVER...
Therefore
NEGATIVE EXTERNALITIES
Misallocation of resources
Over-consumption and Over-production
Starbucks
Africa
23 million liters of drinking water wasted per day...
10% Recycle paper
90% New paper
Plastic lamination lining
Methane
83% of people we surveyed believed that Starbucks ruined local coffee stalls
Minimum Price
Negative Advertising
Tax
Destruction of local coffee vendors
and....
Easily take in 870 calories in one visit to Starbucks
I
Starbucks
Obesity
Unethical purchase of coffee to maximize profits
Cant survive with
Solutions
Thanks for Watching!
Cause prices to rise
signals profit for producers and so extension in supply.
signals less satisfaction to consumers and so contraction in demand.
SURPLUS
May cause the formation of black markets
Market overproduction also leads to allocative inefficiency
Qd
Qs
Cause prices to drop
signals loss for producers and so contraction in supply.
However!
The low prices
may cause increase in demand
OPTIMUM ALLOCATION OF RESOURCES
Cause prices to rise
Contraction in Demand
Supply moves inwards (Tax - MSC)
Prices rise
Quantity decreases
However!
Due to higher prices, it may lead Starbucks to increase supply so as to raise profits
P
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