Imported Tea

4 April 2015
This paper looks at the demand for imported teas in the United States.

The paper looks at the factors which influence the demand for imported consumer goods. It goes on to build appropriate import demand models for analyzing the pattern of imports of tea for consumption in the United States.
“As far as tea is concerned, as is generally believed, it sets its own prices, using prices of its close substitute i.e. coffee, real income, population, price elasticity, income elasticity, cross elasticity, change in the consumer’s preferences or habits do more determine the level of demand for its imports in any country. Based on the above proposition, the study will build appropriate import demand models for analyzing the pattern of imports of tea for consumption in the United States. Since tea imports constitute an insignificant share in the total imports of the United States, the variable the availability of Foreign exchange has been deliberately excluded from the model. I would surmise that the Import Expenditures would rise as GDP rose and prices fell.
An important reason for the fluctuations in exports is reflected by changes in the value of the dollar relative to foreign currencies. The dollar lost value against foreign currencies in the1970s, making U.S. agricultural products less expensive in the importing countries and, predictably, sales increased. In the early 1980s the dollar gained strength, making U.S. exports more expensive to foreign buyers, and exports declined. The dollar then weakened again and exports recovered somewhat. These trends had the inverse effect on imports (US Census Bureau, 2002).”
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