There has recently been an increase in the price of dairy products used in the production of ice cream. High temperatures have also induced people to consume more ice cream. In the market for ice cream, the effects these changes will have on equilibrium price and quantity are:

See explanation below for answer.

Explanation:

From the scenario presented above, we can infer that:

When the price of the raw materials used in manufacturing a product goes up, this will be reflected in the price of the finished product, meaning that the price of the finished product will also increase.

Therefore, as the price of the dairy products used in the production of ice cream increases, the price of the ice cream will also increase.

This increase in price, in a normal situation would discourage people from buying the ice cream, but temperatures have now increased, prompting people to buy the ice cream regardless of the price increase.

The effect on the equilibrium price is that price will increase, and as price increases, there will be an increase in quantity supplied by the manufacturer(s).

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