Think about the supply and demand for hamburgers

a) Consider the hamburger market. Using the ideas you have learned about supply and demand, if the government taxes hamburgers, will there be more or less hamburgers sold? Explain by writing about shifting supply or demand. (Tip: draw a supply and demand diagram for the market for hamburgers on some scratch paper.)

When the government imposes a tax on hamburgers, the supply curve in the market for hamburgers will shift upwards by the same amount of tax. As a result, the price per hamburger paid by the consumer will increase. This will reduce the number of hamburgers sold.

b) Consider the automobile market. Using the ideas you have learned about supply and demand. If there is lots of unemployment and that leads to low income for many people, will there be more or less automobiles sold? Explain by writing about shifting supply and demand. (Tip - draw a supply and demand diagram for the market for automobiles.)

If the consumers' income decreases due to increased unemployment, this will decrease the demand for automobiles. As a result, the demand curve will shift to the left leading to a fall in the equilibrium price and a decrease in the number of automobiles sold.