Consider the market for caramel and butterscotch ice cream toppings. For each price change, identify the likely effect on the demand curve for caramel topping. a. The price of caramel topping decreases
b. The price of ice cream increases
c. The price of butterscotch topping increases

a, a downward movement along the demand curve

b. a leftward shift in the demand curve

c. a rightward shift in the demand curve

Explanation:

If the price of caramel topping decreases, there would be an increase in the quantity demanded of the topping. so there would be a downward movement along the demand curve for caramel topping

Icecream and caramel toppings can be regarded as complement goods

Complementary goods are goods that are consumed together

If the price of icecream increase, the quantity demanded of icecream would decrease. because of the decrease in the quantity demanded of caramel toppings, there would be a decrease in the demand for caramel toppings. the demand curve for caramel toppings would shift inwards reflecting the decrease in demand.

caramel and butterscotch ice cream toppings are substitutes goods

Substitute goods are goods that can be used in place of each other.

If the price of butterscotch topping increases, butterscotch topping becomes more expensive and there would be a decrease in the quantity demand for butterscotch topping. consumers would shift to caramel topping. as a result there would be an increase in demand for caramel topping and the demand curve would shift outward.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

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