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.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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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
D-
Supply
?
Now suppose Congress passes a new tax that decreases the income of Detroit residents.
Transcribed Image Text: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 D- Supply ? Now suppose Congress passes a new tax that decreases the income of Detroit residents.
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