A key skill in economics is the ability to use the theory of supply and demand to analyze specific markets. In this assignment, you geta chance to demonstrate your ability to analyze the effects of several "shocks" to the market for coffee. Choose one of the two scenarios below, tell the scenario you choose. 400 wo r d

Scenario 1: Suppose that, as part of an international trade agreement, the U.S. government reduces the tariff on imported coffee. Will this affect the supply or the demand for coffee? Why? Which determinant of demand or supply is being affected? How will this change the equilibrium price and quantity of coffee? Explain your reasoning.

Scenario 2: Suppose the National Institutes of Health publishes a study finding that coffee drinking reduces the probability of getting colon cancer. How do you imagine this will affect the market for coffee? Why? Which determinant of demand or supply is being affected? How will this change the equilibrium price and quantity of coffee? Explain your reasoning.