Describe what if a income tax is introduced

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Assume the demand function for basketballs is given by QD = 150 - 3P + 0.1I, where P = price of a basketball and I = average income 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 are the equilibrium price and quantity? What if a 20% income tax is introduced?

Reference no: EM13204856

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