Author 
Message 
TAGS:

Hide Tags

Senior Manager
Status: DDay is on February 10th. and I am not stressed
Affiliations: American Management association, American Association of financial accountants
Joined: 12 Apr 2011
Posts: 251
Location: Kuwait
Schools: Columbia university

A company decreased the price of its main product by 50% [#permalink]
Show Tags
19 Nov 2011, 11:14
2
This post received KUDOS
5
This post was BOOKMARKED
Question Stats:
70% (00:59) correct 30% (00:51) wrong based on 344 sessions
HideShow timer Statistics
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
Official Answer and Stats are available only to registered users. Register/ Login.
_________________
Sky is the limit



VP
Status: Top MBA Admissions Consultant
Joined: 24 Jul 2011
Posts: 1358
GRE 1: 1540 Q800 V740

Re: a company decreased the price [#permalink]
Show Tags
19 Nov 2011, 11:33
1
This post received KUDOS
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)
_________________
GyanOne  Top MBA Rankings and MBA Admissions Blog
Top MBA Admissions Consulting  Top MiM Admissions Consulting
Premium MBA Essay ReviewBest MBA Interview PreparationExclusive GMAT coaching
Get a FREE Detailed MBA Profile Evaluation  Call us now +91 98998 31738



Senior Manager
Status: DDay is on February 10th. and I am not stressed
Affiliations: American Management association, American Association of financial accountants
Joined: 12 Apr 2011
Posts: 251
Location: Kuwait
Schools: Columbia university

Re: a company decreased the price [#permalink]
Show Tags
19 Nov 2011, 13:37
Thank you good and easy one. for some reason i couldn't solve it, maybe i was stressed while taking the test. thanks again
_________________
Sky is the limit



Manager
Joined: 27 Oct 2011
Posts: 181
Location: United States
Concentration: Finance, Strategy
GPA: 3.7
WE: Account Management (Consumer Products)

Re: a company decreased the price [#permalink]
Show Tags
25 Mar 2012, 17:23
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. D
_________________
DETERMINED TO BREAK 700!!!



Math Expert
Joined: 02 Sep 2009
Posts: 43789

Re: A company decreased the price of its main product by 50% [#permalink]
Show Tags
26 Mar 2012, 00:17
1
This post received KUDOS
Expert's post
1
This post was BOOKMARKED
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 plugin 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.
_________________
New to the Math Forum? Please read this: Ultimate GMAT Quantitative Megathread  All You Need for Quant  PLEASE READ AND FOLLOW: 12 Rules for Posting!!! Resources: GMAT Math Book  Triangles  Polygons  Coordinate Geometry  Factorials  Circles  Number Theory  Remainders; 8. Overlapping Sets  PDF of Math Book; 10. Remainders  GMAT Prep Software Analysis  SEVEN SAMURAI OF 2012 (BEST DISCUSSIONS)  Tricky questions from previous years.
Collection of Questions: PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. ,11 Mixed Questions, 12 Fresh Meat DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS; 9 Devil's Dozen!!!; 10 Number Properties set., 11 New DS set.
What are GMAT Club Tests? Extrahard Quant Tests with Brilliant Analytics



Manager
Joined: 12 Mar 2012
Posts: 93
Location: India
Concentration: Technology, Strategy
GPA: 3.2
WE: Information Technology (Computer Software)

Re: A company decreased the price of its main product by 50% [#permalink]
Show Tags
26 Mar 2012, 00:22
In such questions it is always easier to chose random values and solve the question.



Intern
Joined: 21 Oct 2012
Posts: 25
GMAT Date: 01192013

Re: A company decreased the price of its main product by 50% [#permalink]
Show Tags
30 Dec 2012, 16:56
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 700800 which is not true.
_________________
MGMAT1  610 MGMAT2  670 MGMAT3  640
OMG



Intern
Joined: 14 Sep 2013
Posts: 2

Re: A company decreased the price of its main product by 50% [#permalink]
Show Tags
18 Nov 2013, 05:53
I'm confused. Can someone please help me understand why the ratio is 100/50? I get that the quantity halved and the price doubled. But I don't get why the final ratio is a 2 instead of a 1.
This is my reasoning with number:
Initial price= 100 Initial Units=100 x=new quantity
(100)(100)=10,000 (.5)(100)(x)=10,000 x=200 (new quantity)
Quantity percent increase= (200100/100)(100)=100% increase
Price decrease= (10050/50)=100% decrease
100/100=1
I know this is wrong, but can someone please help me understand why?



Math Expert
Joined: 02 Sep 2009
Posts: 43789

Re: A company decreased the price of its main product by 50% [#permalink]
Show Tags
18 Nov 2013, 05:57



Intern
Joined: 14 Sep 2013
Posts: 2

Re: A company decreased the price of its main product by 50% [#permalink]
Show Tags
18 Nov 2013, 12:14
Bunuel wrote: sarahmichalmoore wrote: I'm confused. Can someone please help me understand why the ratio is 100/50? I get that the quantity halved and the price doubled. But I don't get why the final ratio is a 2 instead of a 1.
This is my reasoning with number:
Initial price= 100 Initial Units=100 x=new quantity
(100)(100)=10,000 (.5)(100)(x)=10,000 x=200 (new quantity)
Quantity percent increase= (200100/100)(100)=100% increase
Price decrease= (10050/50)=100% decrease
100/100=1
I know this is wrong, but can someone please help me understand why? Is the price decrease from 100 to 50 a 100% decrease? It's 50% decrease: (10050)/100=0.5. Hope it's clear. yes it is. I made a very silly mistake. Thank you so much for clarifying!



Current Student
Joined: 21 Oct 2013
Posts: 193
Location: Germany
GPA: 3.51

Re: A company decreased the price of its main product by 50% [#permalink]
Show Tags
02 Jun 2014, 22:44
I also used an algebraic approach:
initial revenue: p * u = r (p = price; u = units; r= revenue)
now we have a decrease of 0.5 in p and an increase of x in u. r remains the same:
0.5p * (x*u) = r
now equalize:
0.5p * (x*u) = p * u ==> p/0.5p = x*u/u ==> 0.5p=x ==> x = 2 > here's our ratio!
dunno if this it the right approach but it worked for me lol.



Intern
Joined: 12 Apr 2013
Posts: 37
Concentration: Entrepreneurship, Strategy

A company decreased the price of its main product by 50% [#permalink]
Show Tags
11 Aug 2015, 03:35
1
This post was BOOKMARKED
Revenue = Price of product * Units sold Old  $1000 = $100 * 10 New  $1000 = $50 * 20 Percent decrease of price of product = (100  50)/100 *100 = 50 Percent increase of units sold = (20  10)/10 *100 = 100 Required ratio = 100/50 = 2 (Answer choice D)
_________________
Commitment is about stretching your capabilities. It can take you across all obstacles!!



Manager
Joined: 23 Dec 2013
Posts: 235
Location: United States (CA)
GMAT 1: 710 Q45 V41 GMAT 2: 760 Q49 V44
GPA: 3.76

Re: A company decreased the price of its main product by 50% [#permalink]
Show Tags
21 May 2017, 16:44
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 Smart numbers are the best solution to this problem. If we start with PQ =4 and P =2 and Q =2, then we know that P becomes 1 and Q becomes 4. 4/2 = 1 = 100% growth for Q whereas we know that P decreased by 50%. 100%/50% = 2.0 or 200%, the ratio of the increase in quantity to the decrease in price (elasticity of the good).



Manager
Joined: 22 May 2015
Posts: 99

Re: A company decreased the price of its main product by 50% [#permalink]
Show Tags
31 Jan 2018, 06:45
Initial Price = p , Units sold = A Revenue1 = A*P New price = p/2 , Units Sold = B Revenue2 = (B*P)/2 From the prompt Revenue 1 = Revenue 2 => 2*A = B => 100% increase in products sold Required ratio = 100%/ 50% = 2.0
_________________
Consistency is the Key




Re: A company decreased the price of its main product by 50%
[#permalink]
31 Jan 2018, 06:45






