1. You are the manager of Fast & Easy Donuts. Almost all of your donut sales are derived from the drive-through window. You know from experience that coffee is a complement for your donuts. The morning newspaper says that a major storm has just destroyed 50 percent of this year's coffee bean crop.

a. Based on this information, how will this affect how many donuts you bake?State the determinant of demand or

supply for donuts that is affected by the storm and the direction of movement of the demand or supply curve.

Indicate the likely effect on the equilibrium price and quantity of donuts as a result of this event.

b. How does your answer change if, in addition to this storm, another article indicated that consumer incomes are

expected to grow over the next six months?State the determinant of demand or supply that is affected by the

increase in consumer incomes and the direction of movement of the demand curve or supply curve.Indicate the

likely effect on the equilibrium price and quantity of donuts as a result of this event.

c. Draw a single supply and demand diagram to illustrate your answers in (1a) and (1b) above. State explicitly if

either price or quantity cannot be determined as a result of your analysis.