Use the supply and demand model to explain what happens to the equilibrium price and the equilibrium quantity for frozen yogurt in the following cases.

d.There is a sudden increase in the price of milk.

im confused with this one.

The majority of the world’s diamonds comes from Country A and Country B. Suppose that the marginal cost of mining a diamond is $1,000 per diamond and that the demand schedule for diamonds is as follows:

Price Quantity
$ 6,000 5,500
5,000 6,500
4,000 7,500
3,000 8,500
2,000 9,500
1,000 10,500
A. If there were MANY sellers of diamonds, what would equilibrium price and quantity? Why?
B. If there were only one seller, what would be the equilibrium price and quantity? Why?
C. If Country A and Country B formed a cartel, What would be the equilibrium price and quantity? Why? Is this cartel likely to survive? Why or why not?

To understand what happens to the equilibrium price and quantity of frozen yogurt when there is a sudden increase in the price of milk, we need to analyze the relationship between milk and frozen yogurt production.

1. Identify the related goods: Frozen yogurt commonly uses milk as one of its main ingredients. So, an increase in the price of milk affects the cost of producing frozen yogurt.

2. Analyze the effect on supply: Since the price of milk has increased, the cost of producing frozen yogurt rises. As a result, frozen yogurt producers become less willing and able to supply frozen yogurt at the current price. This leads to a decrease in the quantity supplied of frozen yogurt.

3. Analyze the effect on demand: The increase in milk prices may also have an indirect effect on the demand for frozen yogurt. If the price of milk is a significant factor in consumer purchasing decisions, the higher milk price could reduce consumers' willingness to buy frozen yogurt. As a result, the demand for frozen yogurt might decrease.

4. Determine the impact on equilibrium price and quantity: If both supply and demand are affected, we need to consider the relative magnitude of these changes. If the decrease in demand is larger than the decrease in supply, the equilibrium price and quantity will decrease. Conversely, if the decrease in supply is larger than the decrease in demand, the equilibrium price will increase, and the equilibrium quantity will decrease. The exact impact will depend on the specific changes in supply and demand.

In summary, a sudden increase in the price of milk will likely lead to a decrease in the equilibrium quantity of frozen yogurt. The impact on the equilibrium price will depend on the magnitude of the changes in supply and demand.