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Nitella [24]
3 years ago
9

Assume the demand function for basketballs is given by QD = 150 −3P + 0.1I, where P = price of a basketball, and I = average inc

ome of consumers. Also, assume the supply of basketballs is given by QS = 2P. If the market for basketballs is perfectly competitive, and the average income is equal to $1,500, what is the equilibrium price and quantity? What if a 20 percent income tax is introduced?
Business
1 answer:
TEA [102]3 years ago
4 0

Answer: (1) Equilibrium price = 60 and Equilibrium quantity = 120, when I = $1500.

(2)  Equilibrium price = 54 and Equilibrium quantity = 108, when I = $1200.

Explanation:

(1) When Average income (I) = $1500

At equilibrium, QD = QS

150 - 3p + 0.1I = 2p

150 - 3p + 0.1 × 1500 = 2p

5p = 300

p = \frac{300}{5}

p = 60

q = 2p ⇒ 2 × 60 = 120

Hence, p and q are equilibrium price and equilibrium quantity, respectively.

(2) If 20% income tax is introduced then Average income (I) = $1500 - 20% of  $1500 ⇒ $1500 - $300 = $1200

At equilibrium, QD = QS

150 - 3p + 0.1I = 2p

150 - 3p + 0.1 × 1200 = 2p

5p = 270

p = \frac{270}{5}

p = 54

q = 2p ⇒ 2 × 54 = 108

Hence, p and q are equilibrium price and equilibrium quantity, respectively.

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ANTONII [103]

Answer:

False

Explanation:

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In marketing, efforts put into an advertisement can yield a greater result even after the lag period. This means that a product might need more than one advertisement and the combined effects of the advertisements will be seen overtime if not immediately.

In the above question, Joel still went on to get a Ford fusion after seeing the Toyota advert which means that something from his research must have influenced his decision. Either price, quality, or any other factors must have been responsible for Joel's choice but it is definitely not the lagged effect.

Cheers.

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3 years ago
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elixir [45]
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4 0
3 years ago
The product-variety externality is associated with the A. opportunity cost of firms exiting a monopolistically competitive indus
Viefleur [7K]

Answer:

The correct answer is letter "D": consumer surplus that is generated from the introduction of a new product.

Explanation:

Externalities are defined as the effects passed on third parties as a result of the actions of another individual or organization even if the third party has nothing to do with the operations of the individuals or entities. Externalities can be positive or negative.

The product-variety externality is an example of a positive externality. The product-variety externality takes place when a new product is introduced in the market generating a consumer surplus. Thus, end-users benefit from the variety of products available in the market even if that represents more competition for companies.

4 0
2 years ago
Zelda owns a 60 percent general interest in YZ Partnership. At the beginning of 2018, the adjusted basis in her YZ interest was
strojnjashka [21]

Explanation:

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= (210,000) * 60%

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Mazyrski [523]
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Explanation:

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6 0
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