Entrepreneur Edward is planning to open a business selling ice cream. He knows that the price of ice cream is determined by the forces of supply and demand, but he wants a report outlining five specific events that can be expected to cause the equilibrium price of ice cream to increase.

Be sure to include the following elements in your final report:
„X Your analysis must be consistent with the economic theory of demand and supply, so you will need to do some research on the theory first.
„X Briefly describe each event and indicate whether it causes price to rise due to a demand shift or due to a supply shift.

Title: Factors Affecting the Equilibrium Price of Ice Cream: An Analysis based on Supply and Demand

Introduction:
In this report, we will discuss five specific events that can be expected to cause the equilibrium price of ice cream to increase. We will analyze each event in light of the economic theory of demand and supply to determine whether it causes a shift in demand or supply and how it impacts the price of ice cream.

Event 1: Increase in Consumer Income (Demand Shift):
If there is an increase in consumer income, people will have more purchasing power. With more disposable income, consumers are likely to demand more ice cream, thus shifting the demand curve to the right. As a result, the equilibrium price of ice cream will increase, assuming supply remains constant.

Event 2: Hot Weather (Demand Shift):
During hot weather, the demand for ice cream typically increases as people seek relief from the heat. This shift in consumer preferences causes an increase in demand, shifting the demand curve to the right. Consequently, the equilibrium price of ice cream rises as the demand outpaces supply.

Event 3: Increase in Production Costs (Supply Shift):
If there is an increase in production costs, such as rising wages or higher raw material prices, ice cream producers may face higher expenses. To maintain profitability, producers may reduce the quantity supplied, causing the supply curve to shift to the left. This decrease in supply leads to an increase in the equilibrium price of ice cream.

Event 4: Shortage of Raw Materials (Supply Shift):
A scarcity or shortage of raw materials required for ice cream production, such as milk or sugar, can disrupt the supply chain. This limited availability of resources leads to a decrease in the quantity supplied, causing the supply curve to shift to the left. With reduced supply, the equilibrium price of ice cream increases as suppliers compete for limited resources.

Event 5: Increase in Taxes or Regulations (Supply Shift):
If there is an increase in taxes or stricter regulations imposed on ice cream production or sales, it can raise the production costs for businesses. As a result, ice cream producers may reduce their supply in response to the increased expenses, leading to a leftward shift in the supply curve. The reduced supply causes the equilibrium price of ice cream to rise.

Conclusion:
By analyzing the five events mentioned above, we can see that both demand and supply factors play a significant role in determining the equilibrium price of ice cream. Changes in consumer preferences, income, production costs, availability of raw materials, and external factors such as taxes and regulations, can all cause shifts in either demand or supply curves, ultimately leading to changes in the price of ice cream. Entrepreneurs like Edward need to keep these factors in mind while making business decisions in the ice cream industry.