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ECON MICRO

5th Edition
William A. McEachern
ISBN: 9781337000536

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ECON MICRO

5th Edition
William A. McEachern
ISBN: 9781337000536
Textbook Problem

(Demand and Supply) What happens to the equilibrium price and quantity of ice cream in response to each of the following? Explain your answers.

a. The price of dairy cow fodder increases.

b. The price of beef decreases.

c. Concerns arise about the high fat content of ice cream. Simultaneously, the price of sugar used to produce ice cream) increases.

To determine

Effect on the equilibrium price and quantity of the ice-cream.

Concept Introduction:

Equilibrium price refers to the price where the quantity supplied of the good equals the quantity demanded of the good.

Explanation
    a. This will increase the cost of production of the ice-cream and shifts the supply curve to the right. As a result, the equilibrium price will increase.
    b. Due to the decrease in the price of the beef, the supply of the ice-cream increases and the equilibrium price would fall...

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