Answer to Question #165670 in Microeconomics for zoey

Question

Use supply and demand curves to illustrate how each of the following events would

affect the price of KitKat chocolate bar and the quantity of Kitkat bought and sold:

a. An increase in the price of Cadbury chocolate bar.                                     

b. An increase in the price of Chocolate.                                                          

c. A decrease in average income levels.                                                           

 d.    Pandemic has caused cocoa harvest to drop drastically.  

Answer 1

a.      An increase in the price means an increase in Cadbury chocolate production and distribution; hence, the supply is low, and the demand becomes high due to increased consumption.                                   

 

b.     When chocolate increases, it indicates that the demand is high and the supply is low. This calls for balancing between demand and supply by increasing the price.                                                      

 

c.      The decrease in income levels means that the employment sector demand for workers is low while the supply of available workers is very high beyond the working environment to contain. Such calls for a decrease in income levels to balance between the employed worker's number and the big supply of these workers. To accommodate the many, the income is lowered, and many workers are absorbed in industries.                                                       

 

d.     This could be accounted to because many people are no longer working on the farms are restrictions are made to keep social distance and stay at home; therefore, no one of the farms to harvest the crops and go wrong on the farms. Additionally, when labor supply decreases, the demand rises, and prices rise since few people are involved in production and distribution and are expensive to hire. This means many costs will be incurred; therefore, prices shoot to compensate for the high costs.