"Illustrate each of the following events.."
"Show what happens when we have the following changes.."
we need to compare our situation to a base case. Since we're not provided with numbers here, we don't have to make our supply/demand graphic very specific. All we need is a downward sloping demand curve and an upward sloping supply curve.
Here I've drawn a basic supply and demand chart , with the demand curve in blue and the supply curve in red. Note that our Y-axis measures price and our X-axis measures quantity. This is the standard way of doing things.
Note that our equilibrium occurs where supply and demand cross. Here this is denoted by the price p* and the quantity q*.
In the next section, we will answer part (a) of our demand and supply question.