Date: May 25, 2013
To: Entrepreneur Edward
From: Felipe Zamarripa
Subject: Ice Cream Business
For Entrepreneur Edward, I have listed five different events that will lead to the price of ice cream to increase. Event 1 – An increase in income. As the temperature changes and it gets warmer outside, people are going to want to buy larger quantities of ice cream. This demand change causes the supply curve to move to the right while the demand curve remains unchanged. With an increase in sales, the price of ice cream may jump up with people still purchasing it. Event 2 – An increase in the potential customers in the market. If people find out that a certain favorite Ice Cream will be going higher in price, they will stock up before the price goes up. This leads to an increased demand and causes the demand curve to shift rightward. Event 3 – An increase in the number of ice cream providers. With more sellers in the market, the supply curve increases, shifting to the right. Increase demand will increase supplier’s price thus increasing ice cream price. Event 4 – An increase in the vendor’s wages. An increase in the ice cream demand and purchasing price will increase the vendor’s wages continuing the chain reaction. Vendors must be compensated for the selling of the item as an added incentive. This leads to an increase demand and causes the demand curve to shift rightward. Event 5 - A limited time only flavor. A company will want to make the most money out of the flavor before they take it off the market thus giving them the option to increase the price of the item. This will lead to an increase supply shift rightward on the supply