In the market for books, initially there are no taxes on books. Books are normal goods. The government introduces a tax of $4 a book and, at the same time, people's income fall by $4,000 a year. Following these two changes, the equilibrium quantity of books

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The introduction of a tax on books increases the price, leading to a decrease in quantity demanded. Additionally, a fall in income reduces the demand for normal goods like books. Both factors contribute to a decrease in the equilibrium quantity of books.

In the Market for Books, Initially There Are No Taxes