Question

The 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.

Answer 1

Answer:

This is the full question:

suppose the Surgeon General issues a public statement saying that consuming cereal is good for your health.

how does this affect the market for cereal? (why?)

Explanation:

The answer is that the quantity demanded of cereal, represented by the demand curve, will shift to the right, because a factor, other than price, is increasing the demand.

In this case, the demand is increased by a change in consumer's preferences. Customers now are willing to buy more cereal at any given price because the words of the Surgeon General have made them increase their preference for this product.