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Part 2: Short Answer Questions (Show all your work and use only the spaces provided to answer each question). Assume Tea is an inferior good. Suppose the incomes of tea buyers increase and tea leaves become more expensive, explain and show the effect on the market price and quantity of the good in a supply and demand diagram. 2. Suppose that you are in charge of pricing at a local hotpot restaurant. The business needs to increase revenue and your job is on the line. What should you do to your prices? 3. At a price of $20 per tonne, the supply of wheat in Canada is 25 million tonnes and the demand is 30 million tonnes. When the price increases to $25 per tonne, the supply increases to 30 million tonnes and the demand decreases to 20 million tonnes. Assume both the demand and supply curves are linear. a. What is the equation for the demand curve for wheat? b. What is the equation of the supply curve for wheat? c. Using these equations, what is the equilibrium price and quantity of wheat? Draw and label these points on a graph. Pr Focus