What will happen to the supply of chocolate candy bars when the price of cocoa, used...
What will happen to the supply of chocolate candy bars when the price of cocoa, used in the production of chocolate, increases by 20%?
Homework Answers
When the price of cocoa rises by 20%, the supply of chocolate candy bars declines on a relative basis and the price of chocolate candy bar increases.
This can be shown with the help of a supply demand chart below.
The initial supply and demand curve for chocolate candy bars is given by S and D respectively with equilibrium price and quantity at P1 and Q1 respectively.
When the price of cocoa rises by 20%, the production of chocolate candy bars declines on a relative basis due to higher input cost. This translates into shifting of the supply curve to the left from S to S1.
It is important to note that the quantity supplied declines to Q2 while the price rises to P2 on the back of lower supply and higher price of cocoa.
Further, based on the price elasticity of supply, one can calculate the percentage decline in supply when the price of cocoa (key raw material) increases by 20%.
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Standard Direct Materials Cost per Unit Roanoke Company produces chocolate bars. The primary materials used in...
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Roanoke Company produces chocolate bars. The primary materials
used in producing chocolate bars are cocoa, sugar, and milk. The
standard costs for a batch of chocolate (4,400 bars) are as
follows:
Standard Direct Materials Cost per Unit Roanoke Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (4,400 bars) are as follows: Ingredient Quantity Price Cocoa 600 lbs. $0.40 per lb. Sugar 180 lbs....
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2. Consider the world supply of cocoa beans, the main input in the production of chocolate. For each of the events listed below state and explain the likely effect on the supply of cocoa beans a. Wages for farm labour in cocoa-growing regions rises. b. Farmers in various parts of the world see profits being earned by cocoa farmers and choose to enter this industry. c. A dramatic rise in the world price of coffee beans. Assume that farmers growing...
Standard Direct Materials Cost per Unit Roanoke Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (1,110 bars) are as follows: Ingredient Price Cocoa Quantity 420 lbs. 120 lbs. 90 gal. $0.30 per Ib. $0.60 per Ib. Sugar Milk $1.50 per gal. Determine the standard direct materials cost per bar of chocolate. If required, round to the nearest cent. per bar
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