On increasing the price of T.V. sets by 30%, their sale decreases by 20%. What…
2025
On increasing the price of T.V. sets by 30%, their sale decreases by 20%. What is the effect on the revenue receipts of the shop?
- A.
4% increase
- B.
4% decrease
- C.
8% increase
- D.
8% decrease
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Correct answer: A
Answer: 4% increase
Method using a sample value:
Take initial price = 100 and initial quantity = 100, so initial revenue = 100 × 100 = 10,000.
After a 30% price increase, new price = 130. After a 20% fall in sales, new quantity = 80. New revenue = 130 × 80 = 10,400.
Absolute increase = 10,400 − 10,000 = 400, so percentage increase = (400/10,000) × 100 = 4%.
Alternative (factor) method:
Price factor = 1 + 0.30 = 1.3. Quantity factor = 1 − 0.20 = 0.8. Combined revenue factor = 1.3 × 0.8 = 1.04.
Since the revenue factor is 1.04, revenue increases by (1.04 − 1) × 100 = 4%.