Effects of Long Harmattan on Cocoa Prices and Chocolate Ice Cream Production

What are the effects of an unusually long harmattan on cocoa prices and chocolate ice cream production?

How does an increase in cocoa prices due to a long harmattan affect the cost of producing chocolate ice cream?

Effects of Long Harmattan on Cocoa Prices and Chocolate Ice Cream Production

An unusually long harmattan, which increases cocoa prices and subsequently raises the cost of producing chocolate ice cream by 10 percent, will have the following effects:

a. An increase in the cost of producing chocolate ice cream shifts the supply curve for chocolate ice cream to the left.

b. The equilibrium price of chocolate ice cream will increase, and the equilibrium quantity will decrease.

Understanding Cost of Production

The cost of production refers to the total expenses incurred to produce goods or services. In this case, the cost of producing chocolate ice cream includes raw materials such as cocoa, labor costs, utility expenses, and production overhead.

When an unusually long harmattan increases cocoa prices, it directly impacts the cost of producing chocolate ice cream. As the cost of cocoa rises, chocolate ice cream manufacturers face higher input costs, leading to an overall increase in production costs.

As a result of the increased production cost, the supply curve for chocolate ice cream shifts to the left. Producers find it more challenging to supply the same quantity of chocolate ice cream at every price level due to the higher cost of production.

Due to the decrease in supply caused by the higher production costs, the equilibrium price of chocolate ice cream rises. Consumers are willing to pay more for chocolate ice cream as the supply becomes limited, leading to an increase in the market price.

Meanwhile, the equilibrium quantity of chocolate ice cream decreases as producers are unable to supply the same volume at the new price. The shortage of chocolate ice cream in the market results in decreased availability and increased demand, further driving up the price.

In conclusion, an unusually long harmattan that affects cocoa prices has a direct impact on the cost of production for chocolate ice cream, resulting in shifts in the supply curve, changes in equilibrium price and quantity, and ultimately influencing market dynamics.

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