Consider the market for coffee in Claremont.

QD =105 - 4P

QS = 75 + 2P

a.What is the equilibrium price and quantity of coffee in this market?

b.Suppose households expect that coffee prices are going to decrease next week. Describe how this will affect the market including the equilibrium price and quantity.

c.If the government sets the price for coffee at a max of $3.50, describe the affect this will have on the quantity sold, and indicate if this is a price ceiling or a price floor.

d.Draw the graph for this market, including all changes from parts b and c.

e. Calculate the price elasticity of demand if the price is changed from the equilibrium price to $4.00 and indicate if this is elastic, inelastic, or unit elastic.