The following graph shows the market for peanut butter in San Diego, where there are over a thousand stores that sell peanut butter at any given moment. Suppose Congress passes a tax cut that increases the income of San Diego residents. (Assume that peanut butter is a normal good, that is, demand for peanut butter increases as income increases and decreases as income decreases.) Show the effect of this change on the market for peanut butter by shifting one or both of the curves on the following graph, holding all else constant.

The following graph shows the market for peanut butter in San Diego, where there are over a thousand stores that sell peanut butter at any given moment. Suppose Congress passes a tax cut that increases the income of San Diego residents. (Assume that peanut butter is a normal good, that is, demand for peanut butter increases as income increases and decreases as income decreases.) Show the effect of this change on the market for peanut butter by shifting one or both of the curves on the following graph, holding all else constant.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter11: Marketing And Distribution

Section: Chapter Questions

Problem 19AA

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