If cereal is normal good, this will cause the demand for cereal to increase or decrease. SupplyDemandSupplyDemandQUANTITY (Boxes)Now suppose Congress passes a new tax that decreases the income of Detroit residents.If cereal is a normal good, this wil cause the demand for cereal toarchPRICE (Dollars per box) 8. Shifts in supply or demand IThe 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 priceof milk increases. (Assume that people regard cereal and milk as complements.)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 backto its original position, just drag it a little farther.SupplyDemandSupplyDemandsearchPRICE (Dollars per box)

Imposition of taxes reduced the real income that is purchasing power of individuals.

Supply Demand Supply Demand QUANTITY (Boxes) Now suppose Congress passes a new tax that decreases the income of Detroit residents. If cereal is a normal good, this will cause the demand for cereal to PRICE (Dollars per box)

Supply Demand Supply Demand QUANTITY (Boxes) Now suppose Congress passes a new tax that decreases the income of Detroit residents. If cereal is a normal good, this will cause the demand for cereal to PRICE (Dollars per box)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

If cereal is normal good, this will cause the demand for cereal to
increase or decrease.

Supply
Demand
Supply
Demand
QUANTITY (Boxes)
Now suppose Congress passes a new tax that decreases the income of Detroit residents.
If cereal is a normal good, this wil cause the demand for cereal to
arch
PRICE (Dollars per box)

8. Shifts in supply or demand I
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 price
of milk increases. (Assume that people regard cereal and milk as complements.)
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.
Supply
Demand
Supply
Demand
search
PRICE (Dollars per box)

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