19. An inferior good is one for which demand: a. 'rises as income rises. b. falls as income rises. C. is unrelated to income. d. is low because of the low quality of the good. e. is high because the good must be replaced often. 20. Bars frequently offer "free" food during Happy Hour, because: a. they feel charitable. b. they get discounts on food from wholesalers. c. they can increase the demand for drinks this way, because food and drinks are complementary goods. d. food and drinks are substitute goods, so lowering the price of food increases the demand for drinks. e. they don't always behave rationally. IV. Advanced Critical Thinking Consider the following editorial that appeared in following a freeze that destroyed much of the coffee crop in the late 1970s: Coffee prices, it seems, are coming down again, after hitting a record high of $4.42 last year. An Agriculture Department economist, who had predicted $5-a- pound coffee this year, says he "underestimated the power of the U.S. consumer movement. " Perhaps, or maybe, as with so many economists these days, he simply forgot his freshman economics, which has nothing to do with "movements." The coffee market is behaving the way the basic textbooks say a market behaves: Prices go up, demand falls, and prices come down. -The Wall Street Journal, November 30, 1977 1. Suppose that coffee had started out at an equilibrium price of $1.00/pound prior to the freeze. a. Show graphically the initial equilibrium, labeling supply and demand as S1 and D1, respectively. Use Q1 to identify the original equilibrium quantity. b. Show graphically the effect of a freeze that destroys much of the coffee crop, labeling the new supply as S2 and the new equilibrium quantity as Q2. The new equilibrium price is $4.42.) c. Did you shown a change in demand in your answer to part b? Why or why not