Question. Consider the demand for a chocolate bar is given by Qd = 50 2P + 0.5Y, where Y is the average income of the consumers per day and P is the price of a chocolate bar. Let the supply function for the chocolate be defined by Qs = 30P 0.25Pc 2, where P is the price of Cocoa beans per kilogram. i) If the average income of the consumers is Y = $20 a day and the price of cocoa beans is Pc = $2 per kilogram, calculate the equilibrium price and quantity that clears the market? ii) Assume that the supply of cocoa reduced due to bad weather condition and hence price of cocoa increased to Pc = $3 per kilogram. Compute the new equilibrium price and quantity resulting from this input price shock. (Illustrate your answer using a diagram depicting the shock). iii) Assume that, despite the increase in input prices, the price of chocolate remained at the original equilibrium. Given this, calculate the magnitude of the shortage or surplus of chocolate that results from the shock in input prices stated on question (ii) above. Explain the impact of this event on the behavior of suppliers and consumers.