Question
Ed really enjoys coffee and would drink more if he could afford it. Currently, Ed drinks three coffees a week at his local caf. Fortunately,
Ed really enjoys coffee and would drink more if he could afford it. Currently, Ed drinks three coffees a week at his local caf. Fortunately, Ed receives a pay rise at work as do most of the other workers in the local area. Damian, the owner of the caf, hears from his coffee bean supplier that there will soon be a shortage of coffee beans worldwide. Damian is very clever and realises this means he will be able to raise his prices later in the year. If the magnitude of these effects on demand and supply are equal, will the new equilibrium quantity cups of coffee Damien sells at the local caf be higher/equal to/lower than the original quantity supplied? [a] (Type L for lower, E for equal, H for higher, N for need more information).
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