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 of Cadbury chocolate bar will increase the demand for KitKat, as a result both equilibrium price and quantity will increase.

b. An increase in the price of Chocolate will decrease the supply of KitKat, as a result the equilibrium price will increase, and quantity will decrease.

c. A decrease in average income levels will decrease the demand for KitKat, as a result both equilibrium price and quantity will decrease.

d. If pandemic has caused cocoa harvest to drop drastically, then the supply of KitKat will decrease, as a result the equilibrium price will increase, and quantity will decrease.