Answer to Question #279166 in Microeconomics for Sana imran

Question

A survey indicated that strawberry is Pakistan’s favorite ice cream flavor. For each of the following, indicate and discuss the possible effects on demand, supply, or both as well as equilibrium price and quantity of strawberry ice cream. (Also use graphical analysis for explanation)A new report by the International Medical Association reveals that chocolate does, in fact, have significant health benefits.

Answer 1

• quantity supplied will decrease, the equilibrium price will increase, eventually the quantity demanded will decrease - due to the decrease in the milk production
• quantity demanded will increase, the equilibrium price will increase, eventually the quantity supplied will increase - due to positive benefits of chocolate
• quantity demanded will decrease, the equilibrium price will decrease, eventually the quantity supplied will decrease - due to the lower price of a substitute product
• the equilibrium price will decrease, eventually the quantity supplied and demanded will increase - due to the lower manufacturing price