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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:

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3 years ago

On june 8, williams company issued an $80,000, 5%, 120-day note payable to brown industries. assuming a 360-day year, what is th

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To calculate the maturity of this note,

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3 years ago

Short Corporation acquired Hathaway, Inc., for $33,520,000. The fair value of all Hathaway's identifiable tangible and intangibl

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So for goodwill, no amortization is to be done

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Answer:

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Formula that can be used to calculate the disbursement float is =

Amount of average monthly check written X Average number of days it

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Where, amount of average monthly check = $17,000

and average number of days for it to be cleared = 4 days

Disbursement float = $17,000 x 4

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Formula that can be used to calculate the collection float is =

Amount of average monthly check received X Average number of days it

takes to clear check

Where, amount of average monthly check =-$22,000

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3 years ago

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Answer:

Explanation:

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