A survey indicated that chocolate is the most popular flavor of ice cream in America. For each of the following, indicate the possible effects on demand, supply, or both as well as equilibrium price and quantity of chocolate ice cream.a. A severe drought in the Midwest causes dairy farmers to reduce the number of milk-producing cattle in their herds by a third. These dairy farmers supply cream that is used to manufacture chocolate ice cream.b. A new report by the American Medical Association reveals that chocolate does, in fact, have significant health benefits.c. The discovery of cheaper synthetic vanilla flavoring lowers the price of vanilla ice cream.d. New technology for mixing and freezing ice cream lowers manufacturers' costs of producing chocolate ice cream.

Key Concepts: Demand, Supply, Equilibrium Explanation: The question is asking about the effects of certain events on demand and/or supply of chocolate ice cream and how these events would impact the equilibrium price and quantity of chocolate ice cream. For each event, we need to identify whether it affects demand, supply or both and then determine how the equilibrium price and quantity would be affected. Step by Step Solution: Step 1. a. The drought in the Midwest reduces the number of milk-producing cattle in dairy farms which results in a decrease in the supply of cream. The decrease in the supply of cream would increase the cost of producing chocolate ice cream thus causing a decrease in the supply of chocolate ice cream. A decrease in supply coupled with constant demand would result in an increase in the equilibrium price and a decrease in the equilibrium quantity of chocolate ice cream. Step 2. b. The new report by the American Medical Association revealing significant health benefits of chocolate ice cream would create a positive buzz and perceptions about chocolate ice cream. This would increase the demand for chocolate ice cream. An increase in demand coupled with constant supply would result in an increase in both the equilibrium price and quantity of chocolate ice cream. Step 3. c. The discovery of cheaper synthetic vanilla flavoring that results in a price reduction of vanilla ice cream would reduce the demand for chocolate ice cream because of substitution effect. A decrease in demand coupled with constant supply would result in a decrease in the equilibrium price and quantity of chocolate ice cream. Step 4. d. The new technology for mixing and freezing ice cream that lowers the manufacturers' costs of producing chocolate ice cream would naturally lead to lower price of chocolate ice cream that ultimately leads to increases in both the quantity demanded and the quantity supplied. The decrease in price would increase the demand for chocolate ice cream while also increasing the supply of chocolate ice cream. However, since the change in demand and supply are the same, there would only be an increase in the equilibrium quantity, while equilibrium price remains constant.