Answer:
The increase in demand of the product with the higher price or decrease in demand for the other goods is because the substitution effect is outweighed by the income effect of price increase.
Explanation:
The above explanation in economics refers to Giffen Good. The idea behind this concept Giffen is that if you do not have money and there is an increase in the price of a fundamental product such as bread, it is still impossible to afford other alternatives, hence you will go ahead to buy bread or avoid buying any of the product. Hence, the demand for other product will also decrease in this case. This means that the demand for product with higher price or decrease in other substitute product is due to the fact that the income effect outweighs the substitution effect. Hence people do not have the money to even afford the alternative product.
Answer:
The double-exempt bond is the preferred investment because it has a higher after-tax return Tax benefit .
Explanation:
Calculatation of the after-tax return on both bonds
1)The double-exempt bond does not pay state or federal income taxes.
After-tax return =
Before-tax return = 4.9%
2)The tax-exempt bond is the state income taxes, but not federal in which the states can decide whether to tax their bonds or not.
Interest Income (100,000 * 5%) 5,000
Less: State taxes at 10% (5,000* 10%) (500)
Tax benefit from deduction of state taxes on federal return (500 * 35%) 175
After-tax Income 4,675
After-tax return = 4,675/100,000 = 4.675%
Therefore the double-exempt bond is the preferred investment because it has a higher after-tax return Tax benefit .
Hence the state income tax will be deductible on Juan’s federal tax return and Juan’s federal taxable income will be lower or lesser by $500 which will produces tax savings at his federal marginal tax rate of $500 * 35% = $175.
Answer:
The correct answer is option C.
Explanation:
A perfectly competitive firm faces a perfectly elastic demand curve. In a perfectly competitive market, there is a large number of buyers and sellers, such that no single firm is able to affects the price or output level. The demand curve faced by a single firm is a horizontal line.
The market demand curve, on the other hand, is downward sloping. So whatever be the market elasticity of demand, the elasticity of individual firm will be infinite.
Answer:
equation will be 2x+5
Explanation:
We have given the cost of shipping box = $5
Flat packing fee = $5
As given, the cost of shipping a box is based on its weight in pounds so it is variable
And a flat rate of $5 for packing. This means $5 is common for each parcel that will be sent. Only the weight will vary.
So the equation will be 2x+5
Answer:
a. increase price in the short run but not in the long run.
Explanation:
The firms don't use resources that are available in limited quantities. So, as firm output increases, they can use resources in higher quantity but at the same price.
Therefore, as quantity demanded increases, the firms can supply higher quantity without any increase in resource cost. So, price increase in short run but not in the long term.
