Graphically show and explain how each of the conditions below will affect the market for a...
Graphically show and explain how each of the conditions below will affect the market for a generic manufactured good:
a) The excise tax for the product is increased.
b) The firm spends more on advertising its product.
c) Consumers expect the economy to go into a recession in the near future.
d) The population increases.
Homework Answers
A.An increase in excise tax shifts the
demand curve to the left by the amount of the tax.
B.The demand curve shifts to the right due to advertising,as consumers tend to buy more of the products.
C.Consumers tend to reduce their demand when they expect the economy to go into recession.
Graph same as A.
D.An increase in population increases the demand for manufactured goods.
Graph same as B
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