Assume apples are sold in a perfectly competitive market with our standard assumptions concerning supply and demand. Assume the market for apples is initially at a position of equilibrium.

Now assume two shocks to the market. There is a decrease in the price of pears (a substitute for apples) and a new pest decreases the apple yield for this year's growing season.

Explain, in detail, how each of these shocks is likely to affect the market for apples. Explain what you expect to observe with regards to equilibrium quantity and equilibrium price in the market, given the effect of both shocks.