1. Suppose that the price of sugar increases. What would happen to equilibrium price and quantity in the market for Kit Kat chocolate? Explain your answer by making references to a Supply & Demand Curves that you have drawn and their Equilibriums.
2. Suppose that a company invents a better machine for mixing the ingredients to make chocolate candies, but the price of Cocoa rises while the price of sugar falls. What would happen to equilibrium price and quantity in the market for Milky Way chocolate?
3. Suppose the equation for demand can be expressed as P = 120 –1.25Q (P = Price of a good and Q is the Quantity of the good demanded). The equation for supply can be expressed as P = 1.75Q.
a. What is the Quantity Demanded at a Price of $80? (Show All Your Work)
b. Find the equilibrium price and quantity (Show All Your Work)
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