The price of coffee is getting more expensive day by day. The demand for coffee is increasing as more people prefer drinking coffee and also the coffee dealing retailers have increased to meet this demand (Bloomberg, 2018). Notably, I remember last year in June 2018, I walked to my favorite local Starbucks coffee shop to talk a cup of coffee. I have been a regular customer here and only to find that the price of the coffee had been increased by ten to twenty cents. Actually, the tall sized drip coffee price escalated from $.195 to $2.15. I was discontented by a sudden increase in prices of coffee, so I walked out to the next coffee retails shop and found that the price for coffee has been increased too. I was curious to know what would have been the cause for the sudden increase in these prices. Therefore, I asked a certain manager of Starbucks what would be the reason as to why they have their prices. He said that it is not only them who have increased their prices but also other coffee shops because the country was experiencing more saturated markets, which lead to increased costs.
Essentially, this situation can be understood based on positive theory. The causes of the increased prices for coffee were due to non-value judgments (Lesson 1, Slide 9). With regards to the positive theory, one of the non-value factors that influence the price increase is the coffee culture in the United States. Consumer behavior plays a role here through utility maximization as consumers’ sticks to their coffee culture whereby they pay for the amount they are willing to pay which forces businesses not to raise their prices. But, in an instance of a saturated market, some businesses shut down while others are forced to increase the prices for their products and services (Lesson 2, Slide 6). Another factor attributed to positive theory is the public policy which may have contributed to the increase in coffee prices. The state government has passed a sales tax policy for improvement of local roads and transportations which become costly for coffee shops and as a result, it triggers the increase of coffee products in these shops.