How bacon prices change in coming months as a result of Prop 12 is still to be determined... some suppliers might opt to stop selling in California...That could drive up retail prices in the state, while pushing them down in the rest of the country where supply would increase..." 

(I) Draw a new market graph to show how the price of bacon will increase if some suppliers decide to stop selling bacon in California. Explain 

(II) Draw a new market graph to show how the price of bacon will decrease in states other than California if some suppliers decide to stop selling bacon in California. Explain.

Answer rating: 100% (QA)

I In the market graph lets assume initially the market for bacon is in equilibrium with price P1 and ... View the full answer