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A company decreased the price of its main product by 50%

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A company decreased the price of its main product by 50% [#permalink] New post 19 Nov 2011, 12:14
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A company decreased the price of its main product by 50%. Subsequently, the number of units sold increased such that the total revenue remained unchanged. What was the ratio of the percent increase in the units sold to the percent decrease of the original price for this product?

A. 0.5
B. 1.0
C. 1.5
D. 2.0
E. 4.0
[Reveal] Spoiler: OA

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Re: a company decreased the price [#permalink] New post 19 Nov 2011, 12:33
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For the total revenue to remain the same when the price is halved, the number of products sold must double. Therefore increase in the number of products sold is 100%

=> The required ratio = 100%/50% = 2.0

Option (D)
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Senior Manager
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Re: a company decreased the price [#permalink] New post 19 Nov 2011, 14:37
Thank you good and easy one. for some reason i couldn't solve it, maybe i was stressed while taking the test. thanks again :)
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Re: a company decreased the price [#permalink] New post 25 Mar 2012, 18:23
Price decreased so quantity must increase so the net effect of the 50% decrease and % increase in quantity must equal 1. And that is 200% increase. We are looking for the net % increase which is 100% increase and then take the ratio of that which is 100%/50% = 2.
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Re: A company decreased the price of its main product by 50% [#permalink] New post 26 Mar 2012, 01:17
manalq8 wrote:
A company decreased the price of its main product by 50%. Subsequently, the number of units sold increased such that the total revenue remained unchanged. What was the ratio of the percent increase in the units sold to the percent decrease of the original price for this product?

A. 0.5
B. 1.0
C. 1.5
D. 2.0
E. 4.0


Nice explanation above by GyanOne.

One can also use plug-in method: consider the price of the product to be $10 and the units sold at that price to be 1 --> revenue=$10*1=$10;

If we decrease the price by 50% from $10 to $5 then in order the revenue to remain the same 2 units must be sold which is 100% increase in sales (from 1 to 2).

Hence the ratio is 100%/50%=2.

Answer: D.
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Re: A company decreased the price of its main product by 50% [#permalink] New post 26 Mar 2012, 01:22
In such questions it is always easier to chose random values and solve the question.
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Re: A company decreased the price of its main product by 50% [#permalink] New post 30 Dec 2012, 17:56
I used algebraical approach:
1) p1=p2
We know that p1q1=p2q2, let's apply here condition (1) ===> 2p2q1=p2q2. It means that 2q1=q2 or q2/q1=2
Manhattan CAT2 consider this question 700-800 which is not true.
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Re: A company decreased the price of its main product by 50%   [#permalink] 30 Dec 2012, 17:56
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