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Microeconomics:
1. Why does the demand curve for a product slope downwards? Use a diagram to explain what would happen in the market for coffee if there was a fall in the price of tea. On the same diagram, show what would happen if this was followed by a poor coffee bean harvest.
OR
2. Discuss how a firm in a perfectly competitive market can make a loss in the short run yet remain in the market. What happens to the firm in the long run?
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