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15 August, 04:10

A television costs $100, but a new excise tax law imposes a $5 tax on the sale of the set. If Takeshi wants to buy a television, what would have to be his minimum willingness to pay? a. between $100 and $105

b. $105

c. more than $105

d. $100

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Answers (1)
  1. 15 August, 04:34
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    The correct answer is option (A).

    Explanation:

    According to the scenario, the given data are as follows:

    Television cost = $100

    Tax imposed = $5

    So, we can calculate the minimum willingness to pay to buy television can be concluded by taking following observation:

    As the minimum amount of the television without taxes is $100 So, the minimum amount we will take is $100. While after new excise tax law the maximum amount that should be payable to buy television is ($100 + $5 = $105) $105. So, the maximum amount we will take is $105.

    Hence, the amount that should be pay to buy the television should be between $100 and $105.
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