Question

emand or supply. Also late. Graphically illustrate the impact each Suppose we are analyzing the market for hot ch ly. Also show how equilibrium price and of the following would have on demand or quantity have changed. is introduced. (5 points) a A better method of harvesting cocoa to hot chocolate, decreases. (5 points) b. The price of whipped cream, a comple s of milk, causing the price of milk to rise. (5 c. Protesting farmers dump millions of gal points) esion and hot chocolate is considered a normal d. Consumer income falls because of a rece good. (5 points) oly colder. (5 points) e. Winter starts and the weather turns sharply $0.50 per cup above equilibrium. (5 points) f. Currently, the price of hot chocolate is $0.2

Answer 1

Ans) 1) A better method to harvest cocoa beans is technological advancement. Therefore, supply will increase. Supply curve will shift to the right.

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2) When price of complementary goods decreases, demand for product in question increases. As a result, demand curve will shift to the right.

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3) Milk is an input for hot chocolate. Therefore with increase in price of milk, supply of hot chocolate will decrease. Supply curve will shift to the left.

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4) Normal good is one whose demand increasincreth increase in income and vice versa.

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5) With onset of winter, demand for hot chocolate will increase.

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6) When price is above equilibrium price, there will be surplus i.e quantity supplied exceeds quantity demanded.

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