Consider a perfectly competitive market for coffee. Say that due to Tim's trailblazing example, many people are increasingly switching to a substitute good, tea.

a) Using a supply and demand diagram and assuming the market reaches equilibrium, illustrate how this change will likely affect the market for coffee, all else equal. How does your answer depend on price elasticities in this market and why?

b) Say that in the original equilibrium, each producer was making zero profit. Following the change that you illustrated, what would you predict to happen to the structure of this industry and why? Relate your answer to the assumptions of the perfectly competitive model.