Answer to Question #230804 in Economics of Enterprise for amy

Question

What do you think caused the large increase in the price of coffee in 1997? Explain your answer. 

Answer 1

Coffee markets are notoriously unpredictable, but 1997 was particularly so. Extreme weather events have historically resulted in price changes of this size. Low inventory levels and uncertainty about El's consequences were mentioned as the key factors for price rises in 1997.