In the small town of Sweetville, there has been a recent surge in the popularity of gourmet cupcakes. The local bakery, Sweet Delights, is known for its exquisite cupcakes with unique flavors and artistic decorations.

The demand for Sweet Delights cupcakes has been steadily increasing due to their rising popularity among the town's residents. Currently, Sweet Delights produces 200 cupcakes per day and sells them at a price of $3 each

The bakery's owner is considering adjusting the price and quantity of cupcakes to maximize profit. Using the principles of supply and demand, your task is to analyze the scenario and provide recommendations.

Questions:

1. Define the concepts of supply and demand. What factors determine the equilibrium price and quantity in the cupcake market?
2. If the town experiences an decrease in population due to a recent development, predict the likely impact on the demand for Sweet Delights cupcakes. How will this affect the equilibrium price and quantity?
3. If the bakery introduces a new cupcake-making machine that allows them to produce an additional 50 cupcakes per day at the same cost, how will this impact the supply of cupcakes? Predict the changes in equilibrium price and quantity.