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SUPPLY AND DEMAND TOGETHER

24. Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the following would have on demand or supply. Also, show how equilibrium price and quantity have changed. (2 points each)

a. Winter starts and the weather turns sharply colder.
b. The price of cocoa beans decreases.
c. A better method of harvesting cocoa beans is introduced.
d. The Surgeon General of the U.S. announces that hot chocolate cures acne.

Sagot :

GinnyAnswer

Final answer:

Changes in weather, price, and production methods impact the demand and supply for hot chocolate, influencing equilibrium price and quantity.


Explanation:

Winter starting and the weather turning sharply colder: The demand for hot chocolate would increase due to the colder weather, shifting the demand curve to the right. This would lead to a higher equilibrium price and quantity.

The price of cocoa beans decreases: A decrease in the price of cocoa beans would lower production costs, shifting the supply curve to the right. This would result in a lower equilibrium price and higher quantity.

A better method of harvesting cocoa beans is introduced: With improved harvest methods, the supply of cocoa beans would increase, shifting the supply curve to the right. This would lead to a lower equilibrium price and higher quantity.


Learn more about Impact of weather, price, and production methods on supply and demand here:

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