Assume the demand curve for two-litre bottles of Coca-Cola is downward sloping and the supply curve is upward sloping.

a. Draw a diagram showing the monthly metropolitan market for two-litre bottles of Coca-Cola in Australia in 2022 when the equilibrium price is $2.85 per bottle and 4 million bottles were bought and sold. Include a title and label the demand curve, supply curve, equilibrium price and quantity.

b. Explain why $2.00 per bottle is not an equilibrium price. If the market price were temporarily at $2.00 per bottle explain how the market through the price mechanism would return to equilibrium.

Read the following news article to answer the remaining questions.

https://7news.com.au/lifestyle/food/woolworths-and-coles-shoppers-irate-over-absolutely-outrageous-price-rises-on-pepsi-coke-and-kirks-buys-c-5631003

c. Draw a new diagram for the monthly metropolitan market for two-litre bottles of Coca-Cola in Australia in 2022. First draw the initial demand and supply curves, equilibrium price and quantity for January before the price increase. Explain whether the price rise in February in the news article is a result of a movement in the demand curve or the supply curve and why. Draw these changes in your diagram and explain the change in the equilibrium price and quantity after the price increase.

d. If Australian consumers of two-litre bottles of Coca-Cola believed that the price would fall and be lower in March than in February of 2022, would the February demand curve for two-litre bottles of Coca-Cola change? If so how and what would be the consequence on the equilibrium price and quantity in February 2022? {You do not have to draw a diagram for this question}.