The following graph shows the market for cereal in Detroit, where there are over 1,000 stores that sell cereal at any given moment. Suppose the municipal government sharply increases local taxes, making it significantly more expensive to reside in Detroit. Many residents decide to leave the city altogether for areas with lower local taxes. Show the effect of this change on the market for cereal by shifting one or both of the curves on the following graph, holding all else constant. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per box) QUANTITY (Boxes) Supply Demand Demand If cereal is a normal good, this will cause the demand for cereal to Supply Now suppose Congress passes a new tax that decreases the income of Detroit residents.

The following graph shows the market for cereal in Detroit, where there are over 1,000 stores that sell cereal at any given moment. Suppose the municipal government sharply increases local taxes, making it significantly more expensive to reside in Detroit. Many residents decide to leave the city altogether for areas with lower local taxes. Show the effect of this change on the market for cereal by shifting one or both of the curves on the following graph, holding all else constant. Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther. PRICE (Dollars per box) QUANTITY (Boxes) Supply Demand Demand If cereal is a normal good, this will cause the demand for cereal to Supply Now suppose Congress passes a new tax that decreases the income of Detroit residents.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 3SCQ: In an analysis of the market for paint, an economist discovers the facts listed below. State whether...

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In an analysis of the market for paint, an economist discovers the facts listed below. State whether each of these changes will affect supply or demand, and in what direction. There have recently been some important cost-saving inventions in the technology for making paint. Paint is lasting longer so that property owners need not repaint as often. Because of severe hailstorms, many people need to repaint now. The hailstorms damaged several factories that make paint, forcing them to close down for several months.
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