All categories

4 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]4 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

Which of the following is the least reliable resource for fraud statistics? a. Fraud perpetrators. b. FBI agencies. c. Health ag

Stells [14]

Answer:

The correct answer is A) Fraud perpetrators.

Explanation:

Being fraud a crime it is normal to think of certain attributes that make us determine some characteristics of criminals; Preconceived are: poor education, bad manners, and bad by nature. Scholars of criminal behavior have determined certain personality characteristics of the fraud perpetrator that are far from the stereotypes cited.

3 0

4 years ago

The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate

ankoles [38]

Answer:

The payback period is more than 5 years

Explanation:

Net present value is the Net value of all cash inflows and outflows in present value term. All the cash flows are discounted using a required rate of return.

Year Cash flow PV factor Present Value

0 ($490,000) 1 ($490,000)

1 $40,000 0.909 $36,360

2 $10,000 0.826 $8,260

3 $120,000 0.751 $90,120

4 $90,000 0.683 $61,470

5 $180,000 0.621 <u> $111,780 </u>

Net Present Value ($182,010)

NPV of this Investment is negative so, it is not acceptable.

Payback period

Total Net cash inflow of the investment is $440,000 and Initial investment is $490,000. This investment will take more than 5 years to payback the initial investment.

6 0

3 years ago

Developing a new automobile requires the services of many types of experts such as design and electronics engineers, procurers,

sashaice [31]

Answer: Boundaryless organization

Explanation:

Boundaryless organization is an organization that is not hindered or limited by boundaries created through established structures.

It could also mean an organization whose operation is not confined to a particular location or the confine of their office complex.

The idea of boundaryless organization was first conceptualized by Jack Welch who wanted to eliminate any form of barrier (both internally and externally) in the way General Electrics carried out its operations.

•Note that in order to achieved the concept of a boundaryless organization, flexibility and adaptability must be considered.

•Latest technology for getting work done must also be adopted over traditional mode of operation

3 0

3 years ago

Your company will generate 73,000 in annual revenue each year for the next eight years from a new information database. If the a

lys-0071 [83]

$73,000x8.5%=$6,205 for one year
I believe you are looking for either this number or $6,205x8?
$49,640 for 8 years

4 0

3 years ago

Juliana purchased land three years ago for $50,000. She gave the land to Tom, her brother, in the current year, when the fair ma

Nadya [2.5K]

Answer:

Please see attachment

Explanation:

Please see attachment

8 0

3 years ago