Consider the market for chocolate ice cream. For the following events: (1) determine whether the event affects the supply or demand curve; (2) identify what factor has changed that caused supply or demand to shift (e.g., change in preferences, number of sellers, prices of related goods, etc.); (3) use a clearly labelled supply and demand diagram to show the effect of the event on the equilibrium price and quantity of chocolate ice cream.a. A severe drought in the Midwest causes dairy farmers to reduce the number of milk- producing cows in their herds by 40 percent. These dairy farmers supply cream that is used to manufacture chocolate ice cream.A report by the American Medical Association reveals chocolate has significant health benefits.The discovery of cheaper synthetic vanilla flavoring lowers the costs of producing vanilla ice cream. [Be clear about any assumptions you make about the relationship between chocolate ice cream and vanilla ice cream.]New machinery for mixing and freezing ice cream lowers the amount of electricity needed for producing chocolate ice cream.

Changes in price causes a movement along the supply and demand-curve. Whereas, external shocks cause…

Answered: Consider the market for chocolate ice…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the market for chocolate ice cream. For the following events: (1) determine whether the event affects the supply or demand curve; (2) identify what factor has changed that caused supply or demand to shift (e.g., change in preferences, number of sellers, prices of related goods, etc.); (3) use a clearly labelled supply and demand diagram to show the effect of the event on the equilibrium price and quantity of chocolate ice cream.
a. A severe drought in the Midwest causes dairy farmers to reduce the number of milk- producing cows in their herds by 40 percent. These dairy farmers supply cream that is used to manufacture chocolate ice cream.

A report by the American Medical Association reveals chocolate has significant health benefits.
The discovery of cheaper synthetic vanilla flavoring lowers the costs of producing vanilla ice cream. [Be clear about any assumptions you make about the relationship between chocolate ice cream and vanilla ice cream.]
New machinery for mixing and freezing ice cream lowers the amount of electricity needed for producing chocolate ice cream.

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