VeritasPrepKarishma wrote:

ritula wrote:

A certain company that sells only cars and trucks reported that revenues from car sales in 1997 were down 11% from 1996 and revenues from truck sales in 1997 were up 7 perent from 1996. If total revenues from car sales and truck sales in 1997 were up 1 % from 1996, what is the ratio of revenue from car sales in 1996 to revenue from truck sales in 1996?

1:2

4:5

1:1

3:2

5:3

This is a weighted average question. Average of -11% and +7% is +1%.

Using w1/w2 = (A2 - Aavg)/(Aavg - A1),

we get w1/w2 = (7 - 1)/(1- (-11)) = 6/12

Revenue from Car:Revenue from Trucks = 1:2

For explanation of the formula and other details, go to:

http://www.veritasprep.com/blog/2011/03 ... -averages/http://www.veritasprep.com/blog/2011/04 ... ge-brutes/Responding to a pm:

**Quote:**

Hi, are you sure you set up the equation correctly? Because if we assume that cars are denoted with 1 and trucks with 2, and then we use the w1/w2 formula, does that formula not say to us "the ratio of cars to trucks is w1:w2".

But then, if we use the formula as you put it, we get this: w1/w2 = (A2 - Aavg)/(Aavg - A1) = (-11 - 1) / (1 - 7) = -12/-6 = 2/1 ---> ratio of cars to trucks is 2:1..

I understand the numbers I have put in the numerator and denominator are the polar opposite of those you used, but again: if 1 = cars, then according to your formula A2 = the percentage of trucks, and A1 = percentage of cars. And thus we have -11 - 1 in the numerator and 1 - 7 in the denominator.

Am I missunderstanding, or did you in fact simply just put the numbers for A1 and A2 in the wrong places?

Cars denoted by 1 and trucks by 2

w1/w2 = (A2 - Aavg)/(Aavg - A1)

Revenue of cars/Revenue of trucks = (Revenue change of trucks - Avg)/(Avg - Revenue change of cars)

Revenue of cars/Revenue of trucks = (7 - 1)/(1 - (-11))

Notice the highlighted part above. Revenue of trucks changes by +7% and that of cars by -11%.

_________________

Karishma

Veritas Prep | GMAT Instructor

My Blog

Get started with Veritas Prep GMAT On Demand for $199

Veritas Prep Reviews