Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the following would have on dem
and or supply. Also show how equilibrium price and equilibrium quantity would change. a. Winter starts and the weather turns sharply colder. b. The price of tea, a substitute for hot chocolate, falls. c. The price of cocoa beans decreases. d. The price of whipped cream falls. e. A better method of harvesting cocoa beans is introduced.
1 answer:
Answer:
Please check for the graphical illustrations in the attached images
Explanation:
When winter starts, the demand for hot chocolate increases. The demand curve shifts to the right. All things being equal, the supply curve remains unchanged. Equilibrium price and quantity increases
Substitute goods are goods that can be used in place of another good. if the price of a good increases, the demand for the substitute increases and if the price of the good reduces, the demand for the substitute increases
If the price of tea falls, the demand for hot chocolate would fall. The demand curve for hot chocolate would shift leftward. All things being equal, the supply curve would remain unchanged. Equilibrium price and quantity falls
If the price of cocoa beans decreases, it becomes cheaper to make hot chocolate. As a result the supply of hot chocolate increases. All things being equal, the demand curve for hot chocolate remains unchanged. Equilibrium price decreases and equilibrium quantity increases
Complementary goods are goods that are consumed together
Whipped cream is a complement for hot chocolate. If the price of whipped cream falls, the demand for hot chocolate increases. The demand curve shifts to the right. All things being equal, the supply curve remains unchanged. Equilibrium price and quantity increases
A better method of harvesting increases the supply of hot chocolate. As a result the supply of hot chocolate increases. All things being equal, the demand curve for hot chocolate remains unchanged. Equilibrium price decreases and equilibrium quantity increases
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