The demand for ice cream is a function of both the price of ice cream and the price of a substitutegood, frozen yogurt. In particular the demand curve for ice cream, QP (P.c. Py) has the following3. Suppose that the price of yogurt, Py, rises by $1.aqDtwo derivativesOPIC5 andaPya) Illustrate the impact of the rise of the price of yogurt on the ice cream market in your diagram.By how much would the demand for ice cream change at each price of ice cream given therise in the price of yogurt?The market clearing price of ice cream, Pc, is the price at which the demand for ice cream equalsCthe supply of ice cream, QP (Pic, Py) = Q°(Pic)b) The market clearing condition above defines what kind of relationship between the marketclearing price of ice cream and the price of yogurt? Use the market clearing condition to findthe derivative of the relationship between Pic and PyICc) Use the numerical values-5 andOPy3 and your formula from part (b) to predictOPICthe change of the price of ice cream due to the $1 rise in the price of yogurt. Label the newprice of ice cream in your diagram in part (a)

Substitute goods refers to products that can be used in place of each other to satisfy a particular…

The demand for ice cream is a function of both the price of ice cream and the price of a substitute good, frozen yogurt. In particular the demand curve for ice cream, QD (P₁c, Py) has the following მqD 3. Suppose that the price of yogurt, Py, rises by $1. OPY მQP two derivatives = -5 and OPIC a) Illustrate the impact of the rise of the price of yogurt on the ice cream market in your diagram. By how much would the demand for ice cream change at each price of ice cream given the rise in the price of yogurt?