1)Surveys have found that chocolate is Canadians' favourite ice-cream flavour. For

each of the following, indicate the possible effects on demand, supply, or both and

quantity of chocolate ice cream.

a. A severe drought in Ontario causes dairy farmers to reduce the number of milk-

producing cattle in their herds by a third. These dairy farmers supply cream that is

used to manufacture chocolate ice cream.

b. A new report by the Canadian Medical Association reveals that chocolate does,

in

fact, have significant health benefits.

c. The discovery of cheaper synthetic vanilla flavouring lowers the price of vanilla

ice cream.

d. New technology for mixing and freezing ice cream lowers manufacturers' costs

of

producing chocolate ice cream.

2)For each of the following, determine (i) the market in question; (ii) whether a

shift in

demand or supply occurred, and what induced the shift

a. As Canadian gasoline prices fell during the 1990s, more people bought large

cars.

b. As technological innovation has lowered the cost of recycling used paper, fresh

paper made from recycled stock is used more frequently.

c. When a local cable company offers cheaper on-demand films, local movie

theatres

have more unfilled seats.

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