A client surrenders a variable annuity contract 5 years after purchase because of poor performance. Any surrender fee imposed:. a. increases cost basis.
b. reduces cost basis.
c. is deductible.
d. is not deductible.

d. is not deductible.

Explanation: Annuity cancellation is possible before the specified term of the contract which may occur due to poor performance or other needs best known to the holder of the contract. However, when cancellation clause of an annuity is triggered, the holder may have to bear with losses arising from the cancellation in the form of Fall in the net asset value at the time, that is if the net asset value is lower than the cost basis, this is classed as ordinary and is deductible. However, the insurer also charges a non-deductible surrender charge upon cancellation.

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.