For all graphs, be sure to correctly and completely label all axes...

For all graphs, be sure to correctly and completely label all axes and curves and use arrows to indicate the direction of any shifts.

Assume that the market for tea is in equilibrium.

1. Graph the market for tea, assuming unit-elastic supply and demand. Label the equilibrium price Pe and the equilibrium quantity Qe.
2. The price of coffee increases from $5 to $6, and the quantity demanded of tea increases from 40 thousand units to 50,000 units. What is the cross-price elasticity of tea and coffee?
3. Are coffee and tea substitutes or complements? Explain using the elasticity coefficient.
4. Illustrate the effect of the change in the market for coffee from part (b) on your market graph for tea from part (a), labeling the new equilibrium price and quantity Pe2 and Qe2, respectively.
5. What happened to the producer surplus in the market for tea as a result of part (d)?
6. On a new graph, illustrate the effect of an effective price ceiling on coffee. Label the price ceiling Pc, and the quantity exchanged with the ceiling Qc.
7. Shade the deadweight loss from the price ceiling.
8. The pre-ceiling equilibrium price was $4, the price ceiling is $3, and the quantity consumed went from 200 thousand units to 150 thousand units. What is the total amount of revenue lost because of the price ceiling?