Scenario 4.3:
The demand for erasers (Q) is given as follows:
Q = 240 - 4Pe + 2I + Pb + A
where Pe is the price of erasers
I is the level of income
Pb is the price of another good
A is the level of advertising
Suppose that Q = 240, Pe = 10, Pb = 10, and A = 2.
-Given the information in Scenario 4.3, determine I.

Question

Quizplus · Accepted Answer

We can rearrange the demand equation to solve for I:
Q = 240 - 4Pe + 2I + Pb + A
240 = 240 - 4(10) + 2I + 10 + 2
240 = 198 + 2I
42 = 2I
I = 21
Therefore, the level of income (I) is 21, which is closest to choice B (14). However, none of the given choices are exactly correct.

Scenario 4.3: The Demand for Erasers (Q) Is Given as Follows