On increasing the price of TV sets by 25% , their sale decreases by 20% . What…
2025
On increasing the price of TV sets by 25% , their sale decreases by 20% . What is the effect on the revenue receipts of the shop ?
- A.
4 % increase
- B.
4 % decrease
- C.
2 % increase
- D.
No loss no profit
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Correct answer: D
Answer: No loss no profit
Reason: When price increases by 25% and quantity sold decreases by 20%, the revenue changes by the product of the two factors: 1.25 × 0.80 = 1.00. Therefore revenue remains the same.
Take an easy baseline: original price = Rs.100 and original quantity = 100 units. Original revenue = 100 × 100 = Rs.10,000.
New price after 25% increase = Rs.125. New quantity after 20% decrease = 80 units. New revenue = 125 × 80 = Rs.10,000.
Since original and new revenues are equal, there is no gain or loss.