Final answer:
The effect of dropping Baseball Bats on the Sports Company's income depends on the substitution and income effects, where consumers might reallocate their spending on other products, leading to various impacts on income.
Step-by-step explanation:
When deciding whether to drop a product like 'Baseball Bats,' it's important to consider both the substitution effect and the income effect. If the sports company removes Baseball Bats from their product line, it could affect their income depending on consumers' reactions. If the drop leads to customers purchasing more of another product, such as cameras, because they allocate their budgets differently, there could be a range of effects on the company's income.
Consumers may substitute the baseball bats with a different purchase that could either increase or decrease the company's income. It would be imprudent to assume that dropping the Baseball product will only decrease the company's income by a fixed amount without considering how consumers might reallocate their spending.