New Technology for Mixing and Freezing Ice Cream Lowers Production Costs
What effect does the new technology have on the production of chocolate ice cream?
a. Increase costs
b. Reduce costs
c. Have no impact on costs
How will the supply, equilibrium price, and equilibrium quantity of chocolate ice cream be affected by the new technology?
a. Supply will increase, equilibrium price will reduce, equilibrium quantity will increase
b. Supply will decrease, equilibrium price will increase, equilibrium quantity will decrease
c. Supply will remain the same, equilibrium price will remain the same, equilibrium quantity will decrease
Answer:
b. Reduce costs
a. Supply will increase, equilibrium price will reduce, equilibrium quantity will increase
The new technology for mixing and freezing ice cream is lowering the production costs for manufacturers of chocolate ice cream. This means that the costs involved in producing chocolate ice cream will be reduced, enabling manufacturers to produce the product at a lower cost.
With the reduced production costs, the supply of chocolate ice cream will increase. This is because manufacturers can now produce more chocolate ice cream at a lower cost, leading to an increase in the quantity supplied to the market.
As a result of the increased supply, the equilibrium price of chocolate ice cream will reduce. With more chocolate ice cream available in the market at a lower production cost, the equilibrium price will decrease to balance the supply and demand.
Furthermore, the equilibrium quantity of chocolate ice cream will increase due to the higher supply. Consumers will be able to buy more chocolate ice cream at a lower price, resulting in an increase in the equilibrium quantity demanded and supplied in the market.
In conclusion, the new technology for mixing and freezing ice cream that lowers production costs will have a significant impact on the supply, equilibrium price, and equilibrium quantity of chocolate ice cream. It will ultimately benefit consumers with more affordable chocolate ice cream available in the market.