Answer:
The monetary base remains unchanged
Explanation:
Describe some strategic differences between these firms. What type of trade-off decisions have these firms made
Please find full question attached
Answer and Explanation:
I will use Apple and HP in this comparison.Here I would compare Apple's laptop to that of Hewlet Packard as this is where they meet in the industry. Apple employs a strategy of differentiation and standing out in competition through their products. They aim to create products that are quite different and unique/innovative from other products in the market, and yet what the customer wants. In doing this, Apple has a trade-off for cost as they charge alot higher for their products than their competitors. HP on the other hand focus on making the best possible products that get the job done/meet the needs of customers while also being affordable. HP is more focused on affordable devices for their market and therefore have a different market segment for laptops from that of Apple. There is a trade-off for cost and market segment in this comparison
Due to a boom in the US, the average rate of return on investments is likely to rise causing the demand for US dollar to
Answer:
Increase
Explanation:
When there is a boom there is an increase in several key indicators in an economy. Gross domestic product will rise and so also will productivity. This would give rise also to profit as there would be increases in business sale. Then business income will go higher as well as family income. A boom is the result of an increase in consumer spending. The return on investment rises thereby causing an increase in demand for dollars.
"refinance" Alpha Corporation, a publicly held company, had issued a "25 year bonds" worth $80 million at interest rate of 10% five years ago. Alpha had paid $5 million in floating cost. Alpha’s CFO is thinking of refinancing their debt since interest rates have declined considerably. To issue new bonds, they have to call the old bonds which have a call premium of 10%. The investments banks will charge $4 million for the floatation cost of the new issue. Alpha will have to issue new bonds one month before the old bonds are called, and the proceeds will be invested for one month in short term securities which pays 3% per year. Alpha’s tax rate is 40%. Should Alpha refinance its old debt
Answer:
Since the present value of the expenses of issuing new debt is lower than the present value of keeping the old bonds, then the company should issue the new bonds and redeem the old ones.
Explanation:
First of all, we can assume that Alpha is amortizing the flotation costs of the first issuance:
flotation costs = $5,000,000 / 25 years = $200,000 per year and since 5 years have passed, remaining balance of unamortized flotation costs = $4,000,000
when the company redeems its old bonds, it will incur in a $8 (call premium) + $4 (unamortized flotation costs)= $12 million loss
this will yield a tax shield = $12,000,000 x 40% = $4,800,000
total after tax loss = $12,000,000 - $4,800,000 = $7,200,000
current after tax interest + amortization expense = $8,200,000 x (1 - 40%) = $4,920,000
if the company is able to issue 20 year bonds at 8%, its after tax interest + amortization expense (same flotation costs amortization expense) = $6,600,000 x (1 - 40%) = $3,960,000
expenses under current debt:
PV of debt expenses = -$4,920,000 per year x 9.8181 (PV annuity factor, 8%, 20 periods) = -$48,305,052
net expenses if new bonds are issued:
net after tax losses associated to redemption of old bonds = -$7,200,000
PV of debt expenses = $3,960,000 per year x 9.8181 (PV annuity factor, 8%, 20 periods) = -$38,879,676
net proceeds gained from investing $76 million for one month = $76,000,000 x 3% x 1/12 x (1 - 40%) = $114,000
total expenses if new bonds are issued = -$45,965,676
Since the present value of the expenses of issuing new debt is lower than the present value of keeping the old bonds, then the company should issue the new bonds and redeem the old ones.
Most of the significant decisions in contemporary organizations are made under which decision-making condition?
Answer:
A state of uncertainty.
Explanation:
The state of uncertainty is a condition of decision making that can be defined as the risk associated with the manager of making an ineffective decision to solve the expected problem. This is due to the complexity of the current business environment, which ensures that there are inherent risks when making a decision, since there are many variables involved in the current competitive market whose manager does not have full knowledge, so uncertainty exists when making a complex decision.
What the manager can do to minimize uncertainty is to adopt an analytical thinking that gathers the available information and his experience so that risks are minimized, such as the use of statistical analysis and analysis of the variables involved in the decision-making process, to judge the least risky option and try to make the right decision.
Which of the following is NOT one of the appeals of diversifying into unrelated businesses?
a) The relative ease of growing shareholder value by capturing cross-business financial synergies that will quickly drive the company's overall financial performance to higher levels.
b) The ability to employ company's financial resources to maximum advantage by (1) investing in whatever industries offer the best profit prospects and (2) diverting cash flows from company businesses with lower growth and profit prospects to acquiring businesses with higher growth and profit potentials.
c) The potential to better stabilize company profitability over the course of economic upswings and downswings (because market downtrends in some of the company's businesses may be partially offset by cyclical upswings in its other businesses, thus producing somewhat less earnings volatility).
d) The ability to grow shareholder value by exploiting the business acumen of corporate executives in spotting bargain-priced companies with big upside profit potential or in quickly turning around distressed businesses with infusions of cash and superior managerial know- how. and expanding
e) The merits of scattering business risk over a set of truly diverse industries (as opposed to only owning businesses with related value chain activities).
Answer:
a) The relative ease of growing shareholder value by capturing cross-business financial synergies that will quickly drive the company's overall financial performance to higher levels.
Explanation:
The first option is not a benefit of entering/diversifying into an unrelated business because growing shareholder value in this way is not easy. Entering a totally unrelated business(like a product in another industry for example) to the business the company is currently in may very well diversify anD spread out the risks but isn't easily achievable in the sense that it is not easy to succeed since this is a new business that the company is venturing into and would have to work towards securing it's space in the market. Therefore growing shareholder value in this way won't be easy as shareholders may also retract
g The crowding out effect refers to the ________ from ________ in the government's budget deficit.
Answer:
The crowding out effect refers to the decrease in investment from an increase in the government's budget deficit.
Explanation:
The crowding-out effect refers to an expansionary fiscal policy or an increase in government spending that result in an offsetting falls in spending in the private sector.
The increase in government spending is usually inanced by government borrowing from the public and this sometimes bring about an increase in interest rate that dicourages investors from borrowing and therefore causes a fall in the spending by investors.
Therefore, crowding out effect is a situation whereby government hijacked fund that is supposed to be used by investors and the eventual result will be an increase in the government's budget deficit and decrease in investment.
Therefore, the crowding out effect refers to the decrease in investment from an increase in the government's budget deficit.
what are types of opportunity costs
Answer:
This distinction gives rise to two types of opportunity cost--explicit and implicit.
1:Explicit Cost: This is an opportunity cost that involves a money payment and usually a market transaction. ...
2:Implicit Cost: This is an opportunity cost that DOES NOT involve a money payment or market transaction.
Answer:
Explicit CostImplicit CostExplicit Cost: This opportunity cost involves money payment (and sometimes a market transaction).
Implicit Cost: This opportunity cost DOES NOT involves money payment or a market transaction.
Explanation:
econ301 2. What advantages do franchise business offer nonprofit that seek side business to generate revenues to support their causes
Explanation:
A franchise business is one that allows another business (or non-profit) to carry out certain commercial activities, in a sense acting as an agent for the company.
Consider the following advantages:
1. Capital
The franchisor (the company that grants permission) may provide all the capital required to open and operate the non-profit.
2. Better-quality management. The years of experience accumulated by the franchisor may be of benefit to the non-profit. Thus, improving the quality of operations.
Other benefits include;
increase their speed of Growth increased Profitability reduced Risk4 pounds raisins $4.56 per pound, 3 pounds peanuts $4.43 per pound, 5 pounds chocolate chips for $2.68 pound. Determine the cost per pound trail mix.
Answer:
$3.74 per pound
Explanation:
the total mix will weigh 4 + 3 + 5 = 12 pounds (assuming there is no loss in the mixing process)
total cost of ingredients:
raisins = 4 x $4.56 = $18.24
peanuts = 3 x $4.43 = $13.29
chocolate chips = 5 x $2.68 = $13.40
total materials cost = $44.93
materials cost per pound = $44.93 / 12 pounds = $3.7442 = $3.74
An access control strategy that gives a user or group of users only those powers which are absolutely essential to do the job required is called the:
Answer:
Principle of least privilege
Explanation:
Principle of least privilege is a data management strategy that allows users access only to resources that are absolutely required to perform their functuons.
Lowest clearance level is given to uers so it is also called least privilege.
Transactions that requires resources not available to the user needs authorisation by someone with higher access level, for example a supervisor.
Some operating systems also provide default privilege settings for different types of user accounts
Steeze Co. makes snowboards and uses the total cost approach in setting product prices. Its costs for producing 10,000 units follow. The company targets a profit of $300,000 on this product.
Variable Costs per Unit Fixed Costs
Direct materials $ 100 Overhead $ 470,000
Direct labor 25 Selling 105,000
Overhead 20 Administrative 325,000
Selling 5
1. Compute the total cost per unit.
2. Compute the markup percentage on total cost. (Round your final percentage answer to 1 decimal place.)
3. Compute the product's selling price using the total cost method.
1 Total cost per unit
2 Markup percentage
3 Selling price
Answer:
1. $240
2. 12.5%
3. $168.75
Explanation:
1. Total cost per unit = Variable cost per unit + Fixed cost Per unit
= $150 + $90
= $240
Where ;
Variable costs per unit = Direct material +Direct labor + Overhead + Selling
= $100 + $25 + $20 + $5
= $150 per unit
Fixed costs per unit = Total fixed cost / Number of units produced
= ($470,000 + $105,000 + $325,000) / 10,000 units
= $900,000 / 10,000
= $90 per unit
2. Mark up percentage on Total cost = Mark-up / Total cost *100
= $300,000 / $2,400,000 * 100
= 12.5%
Where;
Total cost = Total cost per unit * Number of units produced
= $240 * 10,000 units
= $2,400,000
3. Selling price = Total cost per unit + Mark up
= $150 + ($150 * 12.5%)
= $150 + $18.75
= $168.75
Which of the following is likely to happen if the Fed buys Treasury securities from banks?a. interest rate rises; investment fallsb. interest rate rises; investment risesc. interest rate falls; investment risesd. interest rate falls; investment falls
Answer: c. interest rate falls; investment rises
Explanation:
The Fed buying treasury securities from banks is an expansionary policy when the government wants to increase the money in circulation and increase economic growth.
When the Fed buys Treasury securities from banks, this will lead to availability of funds as prices will be pushed higher and there will be a reduction in the interest rate.
Since there is reduction in interest rate, investment will increase as investors will borrow from banks.
how air particle density and air pressure are related
Explanation:
The more gas particles there are within a given area, the greater the air density. Likewise, the greater the air density, the more gas particles there are per unit volume. Therefore, there are more air particles bombarding with a surface. Thus, the air pressure increases as the air density increases and visa versa... I hope this helps you answer your question :)
If Indiana Ink, Inc. has net sales of $400,000 and cost of goods sold of $300,000, Indiana Ink's gross profit rate is:
Answer:
Gross profit rate= 0.25
Explanation:
Giving the following information:
Indiana Ink, Inc. has net sales of $400,000 and the cost of goods sold of $300,000.
To calculate the gross profit rate, we need to use the following formula:
Gross profit rate= gross profit / sales
Gross profit= sales - COGS
Gross profit rate= 100,000/400,000
Gross profit rate= 0.25
Your firm is contemplating the purchase of a new $684,500 computer-based order entry system. The system will be depreciated straight-line to zero over its 5-year life. It will be worth $66,600 at the end of that time. You will be able to reduce working capital by $92,500 (this is a one-time reduction). The tax rate is 21 percent and your required return on the project is 21 percent and your pretax cost savings are $203,750 per year. At what level of pretax cost savings would you be indifferent between accepting the project and not accepting it?
Answer:
total pretax annual savings = $210,941.06
Explanation:
initial outlay (year 0) = -$684,500 (cost of computer system) + $92,500 (reduction of net working capital) = -$592,000
depreciation expense per year = $684,500 / 5 = $136,900
net after tax cash value = $66,600 x (1 - 21%) = $52,614
net cash flows years 1 - 4 = [($203,750 - $136,900) x 79%] + $136,900 = $189,711.50
net cash flow year 5 = $189,711.50 + $52,614 = $242,325.50
using a 21% discount rate, the NPV = -$16,622.15
Since the NPV is negative, that means that the annual cost savings are not high enough to accept the project.
the point where the company would be indifferent between accepting or rejecting the project is when NPV = 0
this means that net cash flows must increase by $16,622.15 / 2.92595 (PV annuity factor, 21%, 5 periods) = $5,680.94
this is an after tax number, but a pretax annual cost saving = $5,608.94 / 0.79 = $7,191.06
total pretax annual savings = $203,750 + $7,191.06 = $210,941.06
net cash flows years 1 - 4 = [($210,941.06 - $136,900) x 79%] + $136,900 = $195,392.44
net cash flow year 5 = $195,392.44 + $52,614 = $248,006.44
NPV = 0
Given Advanced Company's data, and the knowledge that the product is sold for $71 per unit and operating expenses are $300,000, compute the net income under absorption costing.
a) $70,000
b) $113,000
c) $210,700
d) $183,000
e) $288,000
Answer:
b) $113,000
Explanation:
For the computation of net income under absorption costing first we need to follow some steps which is shown below:-
variable overhead per unit = $105,000 ÷ 35,000
= $3 per unit
The Variable cost of production per unit
Particulars Amount
Direct material $19.00
Direct labor $21.00
Variable overhead $3.00
Variable cost of production
per unit $43.00
Cost per unit of finished goods under absorption costing
Particulars Amount
Total direct material cost $665,000
($19 × 35000)
Total direct labor $735,000
($21 × 35000)
Total variable overhead $105,000
Total fixed overhead $175,000
Total $1,680,000
Units in finished goods = Number of units produced - units sold
= 35,000 - 21,000
= 14,000
Cost of finished goods under variable costing
= Variable cost of production per unit × Number of units in finished goods
= $43 × 14,000
= $602,000
Cost of goods sold
= Production cost - Finished goods cost
= $1,680,000 - $602,000
= $1,078,000
Income statement under absorption costing
Particulars Amount
Sales revenue $1,491,000
($71 × 21,000)
Less: cost of goods sold -$1,078,000
Gross Profit $413,000
Less : operating expenses -$300,000
Net operating income $113,000
Which of the following is not something that is part of the leadership challenge in making?
A. Deciding when corrective adjustments are needed.
B. Accurate analysis of the circumstances causing unacceptable performance (correcting a flawed strategy calls for different actions than correcting weak or flawed strategy execution).
C. Deciding what adjustments to make.
D. Choosing talented company personnel to get the causes of poor performance fixed quickly and then making sure they are generously rewarded for their success.
E. Good implementation of the corrective actions that are initiated.
Answer:
D. Choosing talented company personnel to get the causes of poor performance fixed quickly and then making sure they are generously rewarded for their success.
Explanation:
Leadership is an essential function for a company to be well positioned in the market and achieve its objectives and goals.
According to Fayol, the role of a leader is to plan, organize, command, coordinate and control, so these functions correspond to all alternatives in the text, except D, because the function of quickly resolving the causes of poor performance at work is the leader and not an employee even if the leader believes that the employee has the capacity for such a task.
Which of the following describes a situation in which a third party, outside the transaction, suffers from a market transaction?
a) An efficient market.
b) a negative externality
c) a public good.
d) a positive externality.
Answer:
The correct answer is:
a negative externality (b)
Explanation:
Externalities occur in an economy when the production or consumption of a specific good or service impacts a third party that is not directly related to the production or consumption of that good or service. An externality does not affect the entity that causes the externality. Externalities can be both positive or negative. Let us look at an example of each case:
Negative externality: for example, if a private cement company causes pollution in a community river, there will be a public health impact on the citizens of that community if they consume from the water.
Positive externality: If in establishing a company, that requires a large quantity of power supply, the company sets up a large power generation station that supplies power to a whole community
One problem with the learning strategy for minimizing resistance to change is that it:_____.
a. tends to change people too quickly.
b. leads to long-term antagonism with the change agent.
c. creates compliance but not commitment to the change process.
d. is potentially costly and may not benefit employees at large.
e. attempts to change the drives instead of reducing the restraining forces.
Answer:
c. creates compliance but not commitment to the change process.
Explanation:
Changes occur throughout the organization determined by internal or external factors, but always so that the organization can continue to operate effectively and achieve its objectives. Therefore, when there are changes, there may also be resistance from a large part of the collaborators, due to the fact that the changes can generate insecurity of what is unknown.
It is ideal that there is a process of minimizing resistance to change that aggregates different strategies, in the case of the above question, the learning strategy is beneficial for reducing resistance to change, but if used as a single strategy it can create conformity, but not compromise with the change process.
Ideally, there are different strategies for reducing resistance, such as communicating change in an assertive way, clearly informing the pros and cons of a change, in addition to resolving conflicts, opening up to feedback and doubts, the monitoring and tracking change, learning, etc.
Answer:
D. is potentially costly and may not benefit employees at large.
Explanation:
Directly from Organization Behavior -
Learning - Employees learn how to work in teams as company adopts a
team-based structure.
When applied: When employees need to break old routines and adopt new role patterns.
Problems: Time-consuming, potentially costly, and some employees might not be able to learn the new skills.
The following information on selected cash transactions for 2011 has been provided by Mancuso Company:
Proceeds from sale of land $160,000
Proceeds from long-term borrowings 400,000
Purchases of plant assets 144,000
Purchases of inventories 680,000
Proceeds from sale of Mancuso common stock 240,000
What is the cash provided (used) by investing activities for the year ended December 31, 2011, as a result of the above information?
a. $16,000.
b. $256,000.
c. $160,000.
d. $800,000.
Answer:
a. $16,000.
Explanation:
The computation of the cash provided or used by the investing activities is shown below:
Cash flow from investing activities
Proceeds from the sale of land $1,60,000
Less:
Purchase of plant asset -$1,44,000
Net cash flows provided by investing activities $16,000
hence, the correct option is a. $16,000
Assume the real rate of return is 3.37% and the inflation rate is 1.47%. Find the nominal rate of return using the exact formula.
Answer:
4.89%
Explanation:
Real rate of return = 3.37%
Inflation rate = 1.47%
The nominal rate of return is computed as shown below:
= [ (1 + real rate of return) x (1 + inflation rate) ] - 1
= [ (1 + 0.0337) x (1 + 0.0147) ] - 1
= (1.0337 * 1.0147) - 1
= 1.04889539 - 1
= 0.04889539
= 4.889539%
= 4.89% approx.
If a chart indicates that both the Dow Jones Industrial Average and the advance/decline line have been increasing since January, and the advance/decline line continues to rise, the market should
Answer:
B. Continue to rise
Explanation:
Since if the chart represents the DJIA and the line of advance or decline rises since the month of January and still it continues to be rise so the market should considered that the more and more stocks are increasing in terms of price rather than dropping
Therefore the correct option is B. continue to rise
What was the weighted average interest rate Colgate faced on its short-term borrowings in 2013? Enter with 1 decimal place and with % sign (Ex: 9.9%)
Answer:
The weighted average interest rate that Colgate faced on its short-term borrowings in 2013 was:
2.2%.
Explanation:
Colgate Palmolive reported on page 62 of its 10-K annual report for the fiscal year ended December 31, 2013, that "the weighted-average interest rate on short-term borrowings of $13 in 2013 and $54 in 2012 included in Notes and loans payable in the Consolidated Balance Sheets as of December 31, 2013 and 2012 was 2.2% and 1.0% respectively."
The weighted average interest rate is a product of the different interest rates on its short-term borrowings with their proportional weights. The weights help in determining the average interest rate given their proportional sizes to the total interest expense.
Jervis sells $4,400 of its accounts receivable to Northern Bank in order to obtain necessary cash. Northern Bank charges a 4% factoring fee. What entry should Jervis make on to record the transaction?
a. Debit Accounts Receivable $4,400; credit Cash $4,400.
b. Debit Cash $4,400; credit Accounts Receivable $4,400.
c. Debit Cash $4,576; credit Factoring Fee Expense $176; credit Accounts Receivable $4,400.
d. Debit Cash $4,224; debit Factoring Fee Expense $176; credit Accounts Receivable $4,400.
e. Credit Cash $4,224; credit Factoring Fee Expense $176; debit Accounts Receivable $4,400.
Answer:
Option D is the right answer.
Explanation:
The selling of debt or factoring of debt means selling of the claims to accounts receivables to a third party in return for instant cash. The factoring firm charges a certain factoring fee and only pay a certain percentage of cash to the selling company.
The amount of cash that will be received is,
Cash = 4400 * 0.96 = 4224
Factoring fee expense = 4400 * 0.04 = 176
Thus, the entry to record such a transaction for the firm which is selling its accounts receivable claims is,
Cash 4224 Dr
Factoring Fee expense 176 Dr
Accounts Receivable 4400 Cr
Assume that the risk-free rate is 5% and the required return on the market is 12%. What is the required rate of return on a stock with a beta of 1.5?
Answer:
15.5%
Explanation:
Calculation for the required rate of return
Using this formula
Required return=Risk free rate +(Expected return-Free risk rate)×(Beta)
Let plug in the formula
Required return=0.05+(0.12-0.05)×(1.5)
Required return=0.05+(0.07)×(1.5)
Required return=0.05+0.105
Required return=0.155×100
Required return=15.5%
Therefore the required rate of return on a stock with a beta of 1.5 will be $15.5%
where P is the price of the stock and E is the earnings per share. Recently, the price per share of a certain company was $ and the earnings per share were $. Find the price-earnings ratio. g
Answer:
the information is incomplete but we can assign some numbers just to serve as an example:
suppose that the stock's price is $60, and the earnings per share (EPS) is $1.50, the price earnings ratio will be:
price earnings ratio = stock price / earnings per stock = $60 / $1.50 = 40
. Question 6 Booth & Co. took out a 5-year, 8%, $100,000 loan on April 1, 2018. Interest payments are due to the bank every March 31st. Assume Booth & Co. uses an annual accounting period and the current accounting period ends on December 31, 2018. What would be the effect on Booth & Co.’s Assets, Liabilities, and Stockholders’ Equity if it did not record the adjusting entry on December 31, 2018 related to the interest on this bank loan?
Answer:
the interest expense using a 360 day year = $100,000 x 8% x 9/12 = $6,000
This unrecorded interest expense will result in an overstatement of net income, which in turn overstates retained earnings (part of stockholders' equity). It will also understate liabilities since interest payable is a current liability. Assets would not be affected by this mistake.
When recommending domestic corporate long-term debt instruments to a customer, which of the following risks is the LEAST important consideration? A. Inflation (purchasing power) risk B. Market risk C. Credit risk D. Currency exchange risk
Answer:
D. Currency exchange risk
Explanation:
If you must deal with only domestic long term investments, then you should not worry about the currency exchange risk. The currency exchange risk is extremely relevant and important when you are dealing with investments in foreign countries. The currency exchange risk refers to risks associated with the US dollar depreciating or appreciating against other foreign currencies.
According to the lecture, which of the following is INCORRECT?A. The U.S.-Canadian border was set by agreement at 49* N latitudeB. The Modoc and Klamath native peoples inhabited Oregon while the Palouse and Yakima tribes inhabited WashingtonC. Because of its remoteness, there was much slower population growth in this region than the national averages in U.S. and CanadaD. Most of the region’s population lives in the lowlands from the Fraser River in Canada to the Willamette Valley in WashingtonE. The first railroad to Seattle stimulated large numbers of immigrants, especially Scandinavians, into Washington
Answer:C. Because of its remoteness, there was much slower population growth in this region than the national averages in U.S. and Canada.
Explanation:
Based on the lectures, the correct options are:
• The U.S.-Canadian border was set by agreement at 49* N latitude
• The Modoc and Klamath native peoples inhabited Oregon while the Palouse and Yakima tribes inhabited Washington.
• Most of the region’s population lives in the lowlands from the Fraser River in Canada to the Willamette Valley in Washington.
• The first railroad to Seattle stimulated large numbers of immigrants, especially Scandinavians, into Washington.
Therefore, option C is the answer.
Suppose a firm produces x and y, the firm earns revenues from x=$50000 and revenues from y equal to $ 30000. the own price elasticity of demand for x is -2 and the cross price elasticity of demand between x and y is -0.6. if the firm lowers the price of product x by 1%, the change in the total revenues will be $?
Answer:
If the firm lowers the price of product x by 1%, the change in the total revenues will be $680.
Explanation:
Own price elasticity of demand of a commodity is the degree of responsiveness of quantity demanded of the commodity to a change in its own price. This is given as -2 for commodity x in the question.
The cross price elasticity of demand between any two commodities is the degree of responsiveness of quantity demanded of the first commodity to a change in the price of the second commodity. This is given as -0.6 for between commodity x and y in the question.
Given the information in the question, the change in the total revenues if the firm lowers the price of product x by 1% can be calculated using the following formula:
ΔTR = [(rx * (1 + ex)) + (ry * cexy)] * Δpx ..................... (1)
ΔTR = Change in the total revenues = ?
rx = revenues from x = $50,000
ex = own price elasticity of demand for x is = -2
ry = revenues from y = $30,000
cexy = cross price elasticity of demand between x and y = -0.6
Δp = Change in the price of product x = -1%
Substituting the values into equation (1), we have:
ΔTR = [(50,000 * (1 + (-2))) + (30,000 * (-0.6)] * (-1%)
ΔTR = [(50,000 - 100,000) - 18,000] * (-1%)
ΔTR = [-50,000 - 18,000] * (-1%)
ΔTR = -68,000 * (-1%)
ΔTR = $680
Therefore, if the firm lowers the price of product x by 1%, the change in the total revenues will be $680.