A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and $20,000, respectively. If the price elasticity of demand for good X is -4.0 and the cross-price elasticity of demand between Y and X is 2.0, then a 2 percent decrease in the price of X will: decrease total revenues from X and Y by $200. leave total revenues from X and Y unchanged. increase total revenues from X and Y by $520. decrease total revenues for X and Y by $600.

A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are $10,000 and $20,000, respectively. If the price elasticity of demand for good X is -4.0 and the cross-price elasticity of demand between Y and X is 2.0, then a 2 percent decrease in the price of X will: decrease total revenues from X and Y by $200. leave total revenues from X and Y unchanged. increase total revenues from X and Y by $520. decrease total revenues for X and Y by $600.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Suppose a firm produces two products, X and Y. The firm ears revenues from Xequal to $70,000 and…

A: Price elasticity of demand measures the responsiveness in quantity demanded of a commodity to a…

Q: Consider the following demand function for airline tickets (quantities are in thousands): Q 10-0.1px…

A: Cross elasticity of demand tells how much sensitive is quantity demanded to price change of other…

Q: Suppose that when the price of good X increases from $610 to $710, the quantity demanded of good Y…

A: The objective of the question is to calculate the cross-price elasticity of demand using the…

Q: Use the price-demand equation below to find E(p), the elasticity of demand. x=f(p)=40,000 - 700p…

A: Step 1: Step 2: Step 3: Step 4:

Q: Please answer in detail

A: 3.1.1 Point price elasticity of demand at a price of $40:The market demand function is given as:Q =…

Q: rue or False: A 10% reduction in price that leads to a 10% increase in the amount purchased…

A: The elasticity of demand measures the degree of responsiveness of demand to change in its…

Q: Average income increases from $10,000 / month to $11,000 / month. Quantity demanded per month…

A: Income elasticity of demand measures how the quantity demanded of a good responds to a change in…

Q: 3) Currently 4,000 movie tickets are sold at a price of $ 5 each. The elasticity - price of the…

A: We are going to find the demand function and Price change to answer this question.

Q: Which of the following would tend to INCREASE the elasticity of demand for good X? Multiple Choice…

A: Elasticity of demand of a good is the measurement of change in the quantity demanded of a good due…

Q: Assume a seller of Philly Cheesesteak sandwiches finds out that the elasticity of demand for their…

A: Elasticity is measured as percentage change in quantity divided by Percentage change in price. The…

Q: Comment on the elasticity of demand for a good whose demand falls by 40% with a 10% rise in price.

A: We are given with a type of good whose demand falls almost by 40% if the firm raises the market…

Q: Consider two markets. The initial equilibrium for both markets is the same, P = $6.50 and Q = 35.0.…

A: The price elasticity of supply is a measure used in economics to show the responsiveness, or…

Q: find the price elasticity of demand, the cross-price elasticity of demand and the income elasticity…

A: Elasticity is defined as the responsivess of tge change in the quantity to change in either price…

Q: Qd=60-40P+2I-30Py where: Qd is the quantity demanded of Good X P is the price of Good X I is…

A: Price elasticity of demand measures the responsiveness of quantity demanded for a good due to…

Q: Consider two markets: the market for coffee and the market for hot cocoa. The initial equilibrium…

Q: uppose that you are currently charging $10 for your product and selling 10,000 items. Calculate your…

A: The current price is $10 and quantity sold is 10,000 units. There is an increase in price to $11,…

Q: Suppose the demand for a product is given by QD=100-5P, where QD is quantity per year measured in…

A: The objective of this question is to calculate the elasticity of demand and supply at the…

Q: Suppose the demand curve for a product is giver by Q = 19 - 1P + 2Ps Where P is the price of the…

A: Price elasticity of a demand is a measure of a change in the quantity purchased of a product in…

Q: f average household income increases by 10%, from $50,000 to $55,000 per year, the quantity of rooms…

A: “Since you have posted a question with multiple parts, we will solve only first parts for you. To…

Q: For the demand function Q = 700 – 7P + 3A +0.008Y2 where P is the price of the good, A is the…

A: Positive cross price elaticity implies that goods are substitutes and positive income elaticity…

Question

A firm derives revenue from two sources: goods X and Y. Annual revenues from good X and Y are
$10,000 and $20,000, respectively. If the price elasticity of demand for good X is -4.0 and the
cross-price elasticity of demand between Y and X is 2.0, then a 2 percent decrease in the price of X
will:
decrease total revenues from X and Y by $200.
O leave total revenues from X and Y unchanged.
increase total revenues from X and Y by $520.
decrease total revenues for X and Y by $600.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Final Answer

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

a) Suppose the price of flour increases from $0.60 to $1.10 a pound and the quantity demanded decreases from 100 pounds to 60 pounds. Using the midpoint method, what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic? b) A 15 percent increase in income brings about a 25 percent decrease in the demand for a good. What is the income elasticity of demand and is the good a normal good or an inferior good?
Suppose at the current price, the price elasticity of demand for a firm's product is ε = -1/2. Which of the following is true: A 2% change in the price would be expected to impact quantity demanded by 1% If the price of the product increases, quantity demanded will fall If the firm raises it's price, revenues will increase. All of the above
The price elasticity of supply for basmati rice (an aromatic strain of rice) is likely to be which of the following? multiple choice Higher in the long run than the short run, because farmers cannot easily change their decisions about how much basmati rice to plant once the current crop has been planted. Low in both the long and short runs, because rice farming requires only unskilled labor. High in both the long run and the short run, because the inputs required to produce basmati rice can easily be duplicated. High, because consumers have a lot of other kinds of rice and other staple foods to choose from.
The value of cross-price elasticity of demand between goods X and Y is 1.25, while the cross-price elasticity of demand between goods X and Z is -2.0. Characterize X and Y and X and Z as substitutes or complements.
The demand for company X's product is given by Qx = 12 – 3Px + 4Py. Suppose good X sells for $3.00 per unit and good Y sells for RM1.50 per unit. Calculate the cross-price elasticity of demand between goods X and Y at the given prices. Are goods X and Y substitutes or complements? What is the own price elasticity of demand at these prices? How would your answers to parts i and iii change if the price of X dropped to RM2.50 per unit?
Suppose a straight-line downward-sloping demand curve shifts rightward. Is the price elasticity of demand higher, lower, or the same between any two prices on the new (higher) demand curve than on the old (lower) demand curve?
Which of the following is most likely to have a low price elasticity of demand? A good that is very expensive. A good with no close substitutes. A good that most people consider a luxury. All are equally likely to have a low price elasticity of demand.
The demand curve for a good is What is the elasticity at the point p = $6.00 and Q = 88? The elasticity of demand is ε = Q = 100-2p. (Enter your response rounded to three decimal places and include a minus sign.)
An entrepreneur's most recent venture is selling robots that he builds and programs himself. At a price of $160 each, he sells 660 robots. At a price of $290 each, he sells 340 robots. What is the price elasticity of demand for his robots? Present your elasticity using its absolute value.
You've estimated the market demand curve for the tea market as P=111 -4Q. What is elasticity of demand for tea at P=61 in absolute terms?
Question is pinned below
In a particular market, demand and supply curves are defined by the following equations:QD = 300 – 20P,QS = -540 + 40P,where P is the price per unit in pounds. A) At the equilibrium point, what is the elasticity of demand? B) If the price is £12, what is the elasticity of demand?