While sipping a cup of coffee, CEO William Corke began to reminisce. It seemed like yesterday,but it was actually more than 10 years ago when he had convinced the board of directors ofNational Foods, Inc., to go into the soft drink business. Here he was a decade later, sampling aproduct that his VP of Marketing, Samantha Gordon, was telling him would be an even stronger“growth engine” for the company than bottled water.She had pointed out to him that in 2003 Caribbean consumers spent $1 billion on coffee.Although this amount was far less than the $3 billion spent annually for tea, it was five times asmuch as people spent on coffee a decade ago. “It’s obvious,” she told him, “National Foods mustget into the coffee business.” As he poured his second cup of coffee, Bob had to admit that evenhe had begun to prefer coffee over tea. He decided to call Samantha into his office to discuss thematter further. “Okay, Samantha,” Bob began, “You’ve always had a good instinct for what’s newin the market. But before we leap into this, I want a report on exactly why you believe coffee willbe the real spark to our company’s growth in the coming 5 years. After all, in our business it’s allabout ‘share of stomach.’ If people are drinking more coffee, then they might be drinking fewersoft drinks and bottled water, so we’d be cannibalizing our own products. I’d feel much better ifyou could help me understand why this wouldn’t be the case. Furthermore, what are the keydeterminants of the demand for coffee? Could this be just a fad? Already people are starting to tireof their low-carb diets.Required (30 marks)a. Based on the scenario, prepare a response to the CEO describing how five key demanddeterminants that could affect the demand for coffee. (10 marks)b. Based on your response to question 1 above, write the expression for the following forcoffee:a. Demand function ( 5 marks)b. Demand curve (3 marks)c. How might people respond to changes in the price of competing products such as bottledwater and carbonated soft drinks? (7 marks)d. Explain the factors that would determine if coffee is a ‘luxury’ good, or a necessity.(5 marks)