The following graph plots the market for electric guitars in Houston, where there are always over 1,000 music stores. Suppose the price of acoustic guitars increases. (Assume that people regard electric guitars and acoustic guitars as substitutes.) Show the effect of this change on the market for electric guitars 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 guitar) QUANTITY (Guitars) Supply D2 Demand 0 Supply (?) Now suppose Congress passes new tax that decreases the income of Houston residents. If electric guitars are a normal good, this will cause the demand for electric guitars to increase

The following graph plots the market for electric guitars in Houston, where there are always over 1,000 music stores. Suppose the price of acoustic guitars increases. (Assume that people regard electric guitars and acoustic guitars as substitutes.) Show the effect of this change on the market for electric guitars 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 guitar) QUANTITY (Guitars) Supply D2 Demand 0 Supply (?) Now suppose Congress passes new tax that decreases the income of Houston residents. If electric guitars are a normal good, this will cause the demand for electric guitars to increase

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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