Written assignment of a total of 1500 words. Please answer the following questio

Written assignment of a total of 1500 words. Please answer the following questions:
A) (800 words max) The coffee market is organized as a perfectly competitive market. Please answer the following questions both analytically and using graphs. For the graphs, you can always use linear curves.
1) Explain: i) the basic assumptions underlying this market and ii) where the equilibrium will be found.
2) What will happen in the coffee market if tea prices fall?
3) What will happen in the coffee market if weather conditions spoil part of the coffee beans’
harvest?
4) Answer questions 2 and 3 assuming that the demand curve for coffee is totally inelastic
5) Answer true or false and explain why: “if the coffee market was in a long run equilibrium in
the case described in question 1), after tea prices fall, the new long run equilibrium will have
higher coffee prices”
6) What will happen in the coffee market if the government charges a sales tax?
7) What could the government do with that sales tax revenue?
B) (700 words max) Elaborate on neoclassical economics’ definition of economics and its limitations.