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Adventures in Microeconomics 1

It is morning in Peru’s Selva Alta hills, and the sun has been up for a few hours. Rosa Valencia looks admiringly at the coffee plants she’s grown. The coffee plants’ fruits, called cherries because of the red hue they take on when ripe, are ready for harvest. Rosa’s workers handpick the fruit and carry it to the outbuilding where it is processed. There, other workers sort the cherries, then remove the fruits’ flesh to expose the two seeds—the coffee beans—inside. The beans are washed and prepared for drying and roasting.

That same morning, about 5,000 miles away in Seattle, Washington, home of Starbucks, Lauren Russell grapples with a physics problem. She’s at her favorite coffee shop, a block off campus, for her mid-morning break. Sitting on the table next to her book is her usual, a skinny cappuccino. Every few moments, between calculations, Lauren takes a sip and savors the deep, rich flavor of the coffee.

Lauren and Rosa have never met each other, and likely never will. Yet, their morning routines are connected to each other because the two women are part of the same market, the market for coffee. Lauren’s taste in drinks connects her to Rosa, who provides a critical input for that drink. Both women benefit from this connection: Rosa profits from growing coffee, and Lauren gets a cappuccino at a price she is willing to pay. This is microeconomics at work.