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Suppose We Are Analysing the Market for Hot Chocolate

Question 205

Essay

Suppose we are analysing the market for hot chocolate. What will be the impact on the equilibrium price and quantity of each of the following events affecting the hot chocolate market?
a. winter starts and the weather turns sharply colder
b. the price of coffee falls
c. the price of whipped cream falls
d. the price of cocoa beans increases
e. consumer income falls because of a recession
f. the Health Department of Australia announces that hot chocolate cures acne
g. the population increases
h. a better method of harvesting cocoa beans is introduced

Correct Answer:

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a. people demand more hot chocolate in c...

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