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Question - The demand curve for ice cream in a small town has been stable for the past few years. In most months, when the equilibrium price is $3 per serving for the most popular ice cream, customers buy 300 servings per month. For one month the price of materials used to make ice cream increased, shifting the supply curve to the left.
The equilibrium price in that month increased to $4, and customers bought only 200 portions in the month. With these data draw a graph of a linear demand curve for ice cream in the town. Find price elasticity of demand for prices equal to $3 and $4. At what price would the demand be unitary elastic?
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