All categories

3 years ago

A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and...?

Business

1 answer:

creativ13 [48]3 years ago

7 0

Answer:

The correct answer is (d) Decrease total revenues from X and Y by $600

Lets first calculate change in revenue due to good X

TR = P*Q

where TR = Total revenue , P = Price and Q = Quantity

Formula :

% change in (A*B) = % change in A + % change in B

Thus % change in TR = % change in (P*Q) = % change in P + % change in Q

Own Price Elasticity of demand of X = % change in quantity of X / % change in Price of X

It is given that, Own Price Elasticity of demand of X = -4 and % change in Price of X = -2% (negative sign means that price has decreased)

Hence, -4 = % change in quantity of X / (-2) => % change in Quantity of X = 8%.

Here % change in Q = 8% and % change in P = -2%

% change in (TR) = % change in (P*Q) = % change in (P) + % change in (Q) = -2 + 8 = 6%

Hence Revenue due to good X increases by 6%.

So change in revenue due to Good X = 6% of 10,000 = (6/100)*10000 = 600

Now Lets first calculate change in revenue due to good Y

TR = P*Q

where TR = Total revenue , P = Price and Q = Quantity

Formula :

% change in (A*B) = % change in A + % change in B

Thus % change in TR = % change in (P*Q) = % change in P + % change in Q

Cross Price Elasticity of demand between X and Y = % change in quantity of Y / % change in Price of X

It is given that, Cross Price Elasticity of demand between X and Y = 2 and % change in Price of X = -2% (negative sign means that price has decreased)

Hence, 2 = % change in quantity of Y / (-2) => % change in quantity of Y = 2*(-2) = -4.

Here % change in Q = -4% and % change in P = -2%

% change in (TR) of good Y = % change in (P*Q) = % change in (P) + % change in (Q) = -2 + (-4) = -6%(negative sign means that TR will decrease)

Hence Revenue due to good Y decreases by 6%.

So change in revenue due to Good Y = -(6% of 20,000) = (6/100)*10000 = -1200 (negative sign means that revenue will decrease)

Hence Overall change in total revenue = Change in Revenue due to good X + Change in Revenue due to good Y

=> Overall change in total revenue = 600 + (-1200) = -600

Hence Overall Revenue will decrease by 600

Hence, the correct answer is (d) Decrease total revenues from X and Y by $600

Explanation:

You might be interested in

When production is characterized by opportunity costs, the resulting production possibilities frontier will be a straight line.

MatroZZZ [7]

People often produce goods. When production is characterized by opportunity costs, the resulting production possibilities frontier will be a straight line is a true statement.

<h3>What is opportunity cost in terms of production?</h3>

The opportunity cost of transporting or changing from one efficient combination of production to another that is better is simply defined as how much a specific good that is one goods is given up so that a person can get more of another kind of goods.

Opportunity cost is said to be seen when spending more money on an item.

Due to the above, when production is seen to be more of constant opportunity cost, the resulting production possibilities frontier is known to occur on a straight line.

Learn more about Production from

brainly.com/question/1501489

7 0

2 years ago

If a corporation pays $3 per share in annual dividends for each of the ten shares you purchase for $50 each what is the ROI

DENIUS [597]

If a corporation pays $3 per share in annual dividends for each of the ten shares you purchase for $50 each then the ROI is 2$.

<h3>How is ROI calculated?</h3>

An investment's return on investment (ROI) provides a general indication of its profitability. In order to calculate ROI, subtract the investment's initial cost from its final value, divide the result by the cost of the investment, and then multiply the result by 100.

<h3>What Constitutes a Solid ROI?</h3>

For an investment in stocks, a yearly ROI of 7% or more is typically regarded as a respectable ROI. This also refers to the average annual return of the S&P 500 after accounting for inflation.

To know more about ROI visit:

brainly.com/question/28622693

#SPJ4

5 0

1 year ago

XYZ stock price and dividend history are as follows:

Sedbober [7]

This answer was deleted by a Brainly Staff Member for violating our Terms of Service.

7 0

2 years ago

A broker-dealer offers 4 summer passes to an amusement park to each of its agents who sell at least $10,000 of bonds during the

inn [45]

Answer:

I (allowed) and IV (not considered soft dollar compensation)

Explanation:

Soft dollar compensation refers to payments made to brokerage firms or agents as commission revenue. They differ from hard dollar compensation because hard dollars are payments that were agreed upon before an investor started working with the broker, while soft dollars are based upon variable commissions.

4 0

3 years ago

How can you solve circle geometry in a simple way

lisabon 2012 [21]

Answer: by using the formula A=pi(3.14) R(radius) squared

Explanation:

Hope that helped

8 0

2 years ago

Read 2 more answers