Reference

Alibaba (2013) OLD TOWN White Coffee 3 in 1 Classic. Available from:

http://www.alibaba.com/product-free/110678749/OLD_TOWN_White_Coffee_3_in.html [Accessed 24 October 2013].

Anonymous (2012) OldTown White Coffee City Mall. Facebook [online]. Available from:

https://www.facebook.com/pages/OldTown-White-Coffee-City-Mall/361414250582133?sk=info

 [Accessed 23 October 2013].

Boundless (n.d.) Case Study – Decreasing Demand for smoking. Available from: https://www.boundless.com/economics/principles-of-supply-demand/factors-shifting-the-demand-curves/case-study-decreasing-demand-for-smoking/ [Accessed 24 October 2013].

Doorstep (2013) Aik Cheong 3 in 1 White Coffee Tarik 15x40gm. Available from:

http://www.doorstep.com.my/Corporate/product_info.php/aik-cheong-in-white-coffee-tarik-15-40gm-p-1000004  [Accessed 24 October 2013].

Econhelp (2010) Basic of Elasticity: Part 1. Available from:

http://econhelp.org/2010/02/basics-of-elasticity-part-one/ [Accessed 24 October 2013].

Gregglee (n.d.) Marketing. Available from:

http://www.gregglee.biz/ftp/student/Marketing/page_164.htm  [Accessed 23 October 2013].

Kar, W. (2012) Oldtown White Coffee Franchising. Blogspot [blog]. 2 August. Available from:

oldtownwhitecoffeefranchise.blogspot.com  [Accessed 23 October 2013].

MalaysianDigest (2012) OldTown White Coffee Assures Customers It’s Halal. Available from:

www.malaysiandigest.com/news/36-local2/134032-oldtown-white-coffee-assures-customer-its-halal.html [Accessed 23 October 2013]

New Sarawak Tribune (2013) Oldtown White Coffee grows to 200 stores in M’sia. Available from:

http://www.newsarawaktribune.com/news/3988/Oldtown-White-Coffee-grows-to-200-stores-in-Msia/ [Accessed 15 Oct 2013].

Parkin, M. (2005) Economics. 7th Ed. USA: Pearson Education.

OldTown White Coffee (2013) Investor relations. Available from:

http://oldtown.irplc.com/ [Accessed 15 October 2013].

OldTown White Coffee (2013) Our Business. Available from:

http://www.oldtown.com.my/v1/ourbusiness.php#companyprofile [Accessed 3 October 2013].

OldTown White Coffee (2013) Our Outlets. Available from:

http://www.oldtown.com.my/v1/ouroutlets-locations.html [Accessed 15 Oct 2013].

Starbucks (2013) The Whole Bean Story. Available from:

http://www.starbucks.com.au/The-Whole-Bean-Story.php [Accessed 23 October 2013].

Tan, S.Y. (2013) Interviewed by Jacques Chong, phone, 24 October

Conclusion

OldTown White Coffee which falls under manufactures coffee industry, sells different type of instant coffee mix to the consumers. It is a monopolistic market structure company. In year 2000, a company passing off their packet design and caused a severe decrease in demand. Nevertheless, the sales now are even better than many years ago and they won the case about the passing off design issue. They also having economic efficiency and producing their coffee mix in an equilibrium price and quantity. OldTown White Coffee will continue expand their branch to all around the world to let everyone has a chance to taste the coffee drink from Ipoh.

Elasticity

The elasticity concept clarifies the responsiveness of one variable to changes in another. The price of the OldTown White Coffee's coffee mix is elastic. This means that consumers are sensitive to the price changes of the coffee mix.

Graph 7: Elastic demand curve (Econhelp, 2010)

According to Graph 7, it is obvious that the change in quantity demanded is greater than the changes in price. This is because there are highly substitutable coffee mix in the market. Since consumers can easily switch their purchases to substitutes when the price of coffee mix changes, so consumers will tend to buy competitor’s coffee mix instead of OldTown White Coffee whenever it increases the price.

Assuming that graph 7 shows the changes in price and changes in quantity demanded of OldTown White Coffee’s coffee mix.

The price elasticity of demand of coffee mix is shown below :

Price Elasticity of Demand = %ΔQD / %ΔP

Price Elasticity of Demand = (60/60) / (3/9.5)

Price Elasticity of Demand = 1/0.3158

Price Elasticity of Demand = 3.1666

The result shows that the price of coffee mix is elastic as the price elasticity of demand is greater than 1 but less than infinity. This means that the percentage decreases in the quantity demanded exceeds the percentage increase in price.

Equilibrium

When the quantity demanded and quantity supplied are the same, then equilibrium will be formed. Although at sometimes that the demand and supply do not meet the equilibrium point, but due to occurrence of the market failure, then price adjustment will take place. For example, if OldTown White Coffee raises their coffee mix’s price, and it is over the consumer’s buying power, then a surplus will occur as quantity demanded is less than the quantity supplied. Thus, they have to lower their price to the equilibrium price and equilibrium quantity in order to avoid any economic loss.

Graph 6: Surplus occurrence in the market(n.d.)

When a shortage occurs, that means the quantity demanded is more than quantity supplied. In another words, there are not enough goods produced. When the price of coffee mix is low, consequently it will attract many consumers to demand more for coffee mix. But OldTown White Coffee has limited goods produced. Therefore, they will increase the price of coffee mix until the equilibrium price, and then shortage is cancelled off. In this case, equilibrium happens again after adjusting the prices and the market is efficiency.