When the price of article was reduced by 20% its sales increased by 80% What is the net effect on the revenue?

Let the Price of an article is 100 RS and initially 100 Articles were sold. Therefore total revenue = 100*100=10000 RS. Now , When Price is reduced by 20% and sale is increased by 80% Then Price of an Article will be 80 RS. and Total Articles sold will be 180 Therefore total revenue = 80*180= 14400 RS.

So, Profit% = (4400*100)/10000 = 44%

Correct Answer:

Description for Correct answer:

Pricce = 20% \( \Large =\frac{1}{5} \)sale\( \Large =80\% =\frac{4}{5} \)

\( \Large =\frac{11}{25} \times 100=44\% \)

Comments

Similar Questions

Manager

Joined: 26 Dec 2011

Posts: 113

Schools: HBS '18 IIMA

When the price of an article was reduced by 20% its sale increased by [#permalink]

00:00

Difficulty:

Question Stats:

Hide Show timer Statistics

When the price of an article was reduced by 20% its sale increased by 80%. What was the net effect on the sale?(A) 44% increase(B) 44% decrease (C) 60% increase(D) 66% increase(E) 66% decrease_________________

Please press kudos if you like my post.

GMAT Tutor

Joined: 24 Jun 2008

Posts: 4085

Re: When the price of an article was reduced by 20% its sale increased by [#permalink]

The question asks "what was the net effect on the sale?" and tells us "the sale increased by 80%". So the answer is 80%. There's a problem with the wording of the question.The question surely means to ask "what was the effect on the revenue". This is a pure ratio question, so you can just invent numbers if you like - the answer will be the same for any numbers you choose. So you could imagine at first 10 items were sold for $10 each, for $100 revenue. Then after the percent changes, 18 items were sold for $8 each, for $144 revenue, a 44% increase.Or you can use algebra: if n items are sold for $p each, revenue is $np. If we reduce the price by 20%, the new price is 0.8p. If we increase the number sold by 80%, the new number sold is 1.8n. So the new revenue is (0.8p)(1.8n) = 1.44np, which is 1.44 times the old revenue, so is 44% greater. _________________

GMAT Tutor in MontrealContact me for online GMAT math tutoring, or about my higher-level GMAT Quant books and problem sets, at ianstewartgmat at gmail.com

ianstewartgmat.com

Intern

Joined: 04 Apr 2017

Posts: 3

Re: When the price of an article was reduced by 20% its sale increased by [#permalink]

The answer is ASimply put =(1.8x0.8) - 1 = 1.44 - 1 = 0.44

Posted from my mobile device

EMPOWERgmat Instructor

Joined: 19 Dec 2014

Status:GMAT Assassin/Co-Founder

Affiliations: EMPOWERgmat

Posts: 21148

Location: United States (CA)

Re: When the price of an article was reduced by 20% its sale increased by [#permalink]

HI All,This question is poorly-worded, but the intent is to compare the 'before revenue' to the 'after revenue' in terms of percentage change...We're told that decreasing the price of an item by 20% led to an increase of 80% in total number of that item sold. This question can be solved by TESTing VALUES.IF...Original Price = $100/unitOriginal Number sold = 100 unitsTotal Revenue = ($100)(100) = $10,000New Price = $100 - (.20)($100) = $80/unitNew Number sold = 100(1.8) = 180 unitsTotal Revenue = ($80)(180) = $14,400Percent Change = (new - old)/(old) = (14,400 - 10,000)/10,000 = 4,400/10,000 = 44/100 = 44% increase in revenue

Final Answer:

Intern

Joined: 27 Feb 2018

Posts: 1

Re: When the price of an article was reduced by 20% its sale increased by [#permalink]

S.P reduced to 80 from 100Sell increase by 80% i.e. 1.8 TimesNew sales = 0.8 *1.8 = 1.44

Net effect on sales 44% increase.

Board of Directors

Joined: 11 Jun 2011

Status:QA & VA Forum Moderator

Posts: 5642

Location: India

GPA: 3.5

WE:Business Development (Commercial Banking)

Re: When the price of an article was reduced by 20% its sale increased by [#permalink]

balamoon wrote:

When the price of an article was reduced by 20% its sale increased by 80%. What was the net effect on the sale?(A) 44% increase(B) 44% decrease (C) 60% increase(D) 66% increase(E) 66% decrease_________________

Please press kudos if you like my post.

Non-Human User

Joined: 09 Sep 2013

Posts: 25676

Re: When the price of an article was reduced by 20% its sale increased by [#permalink]

Hello from the GMAT Club BumpBot!Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email. _________________

Re: When the price of an article was reduced by 20% its sale increased by [#permalink]