A decrease of 20% on the price of a cycle, increases its demand by 20%. The effect on the sale of shop is: ​

  • matematika

    Subject:

    Math
  • Author:

    bosco
  • Created:

    1 year ago

Answers 2

Answer:

the correct answer is 10% increase

Concept

Total sale = Price of 1 unit*Number of units sold.

Given

The price of a cycle decreases by 20% and its demand is increased by 20%.

Find

We are asked to find the effect on the sale of the shop.

Solution

Let the initial price be P and the initial number of cycles sold be Q.

∴ Initial sale = P*Q = PQ

In the given case, the Price is decreased by 20% and the quantity is increased by 20%.

∴ New price = P - 20% of P = P - 0.2P = 0.8P

∴ New quantity = Q + 20% of Q = Q + 0.2Q = 0.8Q

∴ New sales = 0.8P*1.2Q = 0.96PQ

∴ Change in sales = New Sales - Initial Sales = 0.96PQ - PQ = -0.04PQ

∴ Effect in sales = Change in sales/Initial sales *100%

= (-0.04PQ/PQ)*100% = -0.04*100% = -4%.

The negative sign depicts that the sales have decreased.

∴ Hence, the sales of the shop are decreased by 4%.

#SPJ2

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