Answered step by step
Verified Expert Solution
Question
1 Approved Answer
In April, 80% of the American population gets an income tax rebate. What happens to the price and quantity of all inferior goods? Use the
In April, 80% of the American population gets an income tax rebate. What happens to the price and quantity of all inferior goods?
Use the following Hill Method Format:
Step#1: Draw a Supply and Demand curve: Label all axis, Label equilibrium Price and Equilibrium Quantity Per Unit Price $10 $9 $8 $7 $6 Quantity Demand: 0 10 20 30 40 50 60 70 80 Step#2: List Determinants: Demand Determinants Supply Determinants Yn (income for a normal good) C (cost) Yi (income for a inferior good) Tech (Technology) Pc (Price of a complementary good) #S (Number of Sellers) Ps (Price of a substitute good) Ra (Resource Availability) #B (Number of Buyers) I (Tastes - Preference) EXPpy (Expectancy of change) Px (Price Special) Px (Price Special) Step#3: Read Problem, and Select Determinant the Changed with an "X" Step #4: Draw Formula to solve Problem: (always the same), then fill in the first three components (blanks). Change in Change in Change in Change in Price Change in Determinant Demand Supply [after line shift] Quantity [Determinant and [relationship and [relationship and [after line shift] change in line shift] lime shift] determinant]Remember, we have 6 possibilities of change Demand Demand Supply Supply Price is held above Price is held Increasea Decreasea Increases Decreasea equilibrium below equilibrium XX Price Price Step#5: Change supply and demand curve accordingly. Then fill in the last two components of formula. Per Unit Price $10 $9 $8 $7 $6 $5 $4 $3 Quantity Demand: 0 10 20 30 40 50 60 70 80 Change in Change in Change in Change in Price Change in Determinant Demand Supply [after line shift] Quantity [Determinant and [relationship and [relationship and [after line shift] change in line shift] line shift] determinant] Step #6: List the Conclusion: (what was the change in price and quantity) Step #7: Justify the determinant that changed: (why did you select your determinant)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started