o First, draw the graph and the initial equilibrium graph for each part. Label your axes. o Second, answer whether each following events changes demand or supply, and if so in which direction (increase or decrease)- and why? Draw this effect in the graph, and give a label to the new equilibrium. o Third, compare the new equilibrium to the initial equilibrium. Has the equilibrium price increased/decreased? Has equilibrium quantity increased/decreased?

The price of donuts rise (note that donuts and coffee are complements) AND there are less workers willing to supply their labor towards making coffee. The effect of the second event is larger than the first. What happens to equilibrium price (Pe) and equilibrium quantity (Qe)?