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gizmo_the_mogwai [7]
3 years ago
6

The wrist watch industry in a country is not very competitive. There are limited brands available and the existing firms use the

ir market power to keep prices high.​ Envy, one of the leading brands in the​ market, is planning to increase the price from​ $1,000 to​ $1,100 per watch. The firm is expecting the quantity demanded to fall by only 7 percent.​ However, after the price is increased to​ $1,100, quantity demanded actually declined by 12 percent.​ Sonia, a student of​ economics, knows that the average income level in this country has increased over the last year. When actual sales of Envy watches turn out to be lower than​ anticipated, she concludes that the income elasticity of demand for Envy watches is negative. Her conclusion is flawed because
Business
1 answer:
olchik [2.2K]3 years ago
5 0

Answer:

B. she is confusing between price elasticity of demand and income elasticity of demand.

Explanation:

Income elasticity of demand measures the change of quantities demanded for a particular good to a change in its income.

It is therefore calculated as the ratio of the percentage change in quantity demanded to the percentage change in income.

Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its price change.

Mathematically:

Price Elasticity of Demand = % Change in Quantity Demand / % Change in Price.

From the above definitions stated about income and price elasticity of demand, the income in that year increased but the quantity of goods demanded decreased further by 5% from the predicted 7% (12 %)

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Answer:

B) $9,500, 000

Explanation:

The tax basis for Ted's estate is $9,500,000, ans since it falls under the current federal estate tax exemption($11,400,000), his wife and children do not have to pay any estate taxes.  If Ted's family sells the assets before the six month alternate valuation is effective, then their tax basis will be the same as Ted's estate ($9,500,000).

3 0
4 years ago
Suppose gold​ (G) and silver​ (S) are substitutes for each other because both serve as hedges against inflation. Suppose also th
maksim [4K]

Answer:

a) Gold = $1,380; Silver = $1,020

b) Gold = $1,300; Silver = $980

Explanation:

a) At first, with Qg = 60 and Qs = 270, the equilibrium prices for gold and silver are found by solving the following linear system:

P_g = 930-60 +0.50 P_s\\P_s = 600 - 270 + 0.50P_g\\\\-P_s=1740 -2P_g\\P_s = 330+ 0.50P_g\\P_g = 1,380\\P_s = 1,020

Equilibrium price of gold is $1,380 and the price of silver is $1,020.

b) If the supply of gold increases to 120, since the goods are substitutes, there will be an increase in overall supply and the equilibrium price of gold and silver will decrease as follows:

P_g = 930-120 +0.50 P_s\\P_s = 600 - 270 + 0.50P_g\\\\-P_s=1620 -2P_g\\P_s = 330+ 0.50P_g\\P_g = 1,300\\P_s = 980

Equilibrium price of gold is $1,300 and the price of silver is $980.

8 0
3 years ago
​Use the following to answer the questions. ​ Suppose that Ray-Ban is considering a new line of sunglasses that would be sold in
Delvig [45]

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Demand-based pricing, refers to the method of pricing whereby the fluctuations in the demand of consumers is considered.

Due to the flctuations, the prices are adjusted in a way that fits the changes in the values of the product.

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3 years ago
Taxes that have wealthy people pay a higher rate of tax than average or poor people are called __________.
Furkat [3]
Taxes that have wealthy people pay a higher rate of tax than average or poor people are called Progressive tax. It is the type of tax that goes on increasing with increase of income. The people with higher income pays a higher amount of tax than the people with lower income. I hope the answer has helped you.
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4 years ago
Suppose Intel stock has a beta of 1.6, whereas Boeing stock has a beta of 1. If the risk-free interest rate is 4% and the expect
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Answer: see affixed, a document containing the solution

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