Now suppose congress passes a tax cut that increases the income of new york city residents. If donuts are a normal good, this will cause the demand for donuts to
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When tax is cut people income will increase which will make them have more money and businesses like donuts demand will be high because people will afford to take any type of donuts.
Explanation:
- When people are able to pay less for different products like donuts they will be encouraged to spend more money.
- The cut of taxes from donuts will enable them to sell at a fair price where more people will buy thus making more profit.
- Additionally, in New York people will be encouraged to work even more hard so as to increase the productivity which will increase donuts business including their marketing.
To learn more......
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