Question

Search this cous Homework (Ch 04) 5. Shifts in supply or demand I The following graph shows the market for cereal in Houston, where there are over 1,000 stores that sell cereal at any given moment. Suppose the Surgeon General issues a public statement saying that consuming cereal is good for your health. 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 ICE (Dollars per box)

Answer 1

Solution The statement that consuming cereal es good for health will increase demand ie demand curve will shift to right, S Price (dollar per box) .D Quantity when new tox decreases (boxes) income of residents, they will have less money to spend and demand curve will shift to left, assuming cereals to be normal good. ys per bex) price (dollars \D pv Quantity (boxes)