Assume that the labor market for coffee roasters is in equilibrium.
a. Graph this labor market.
b. A new ad campaign by the coffee industry, “A coffee a day keeps the sleepies away,” is successful and consumers prefer more coffee. Graph the effect of this on equilibrium wages W1 and quantity of labor L1 of workers. Label the new equilibrium W2 and L2.
c. At the old W1, what situation exists? How does the labor market adjust to the new W2?