NEW HERE? LEARN MORE
closeclose
Last visit was: 23 Apr 2024, 18:40 It is currently 23 Apr 2024, 18:40
Decision Tracker
My Rewards
New posts
New comers' posts

Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel

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

SORT BY:
Date
Kudos
Tags:
Find Similar Topics 
Show Tags
Hide Tags
User avatar
manalq8
Manager
Manager
Joined: 12 Apr 2011
Status:D-Day is on February 10th. and I am not stressed
Affiliations: American Management association, American Association of financial accountants
Posts: 118
Own Kudos [?]: 1848 [13]
Given Kudos: 52
Location: Kuwait
Concentration: finance and international business
Schools:Columbia university
 Q18  V17 GMAT 2: 320  Q18  V19 GMAT 3: 620  Q42  V33
GPA: 3.48
Send PM
A company decreased the price of its main product by 50% [#permalink] New post   19 Nov 2011, 12:14
2
Kudos
11
Bookmarks
00:00
A
B
C
D
E

Difficulty:

25% (medium)

Question Stats:

72% (01:31) correct 28% (01:44) wrong based on 572 sessions
Hide Show 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
ShowHide Answer
Official Answer
D
User avatar
L
GyanOne
CEO
CEO
Joined: 24 Jul 2011
Status: World Rank #4 MBA Admissions Consultant
Posts: 3187
Own Kudos [?]: 1585 [3]
Given Kudos: 33
GMAT 1: 780 Q51 V48
GRE 1: Q170 V170
Send PM
Re: a company decreased the price [#permalink] New post   19 Nov 2011, 12:33
3
Kudos
Expert Reply
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)
User avatar
L
Bunuel
Math Expert
Joined: 02 Sep 2009
Posts: 92883
Own Kudos [?]: 618603 [2]
Given Kudos: 81563
Send PM
CAT Tests Forum Quiz Mode
Re: A company decreased the price of its main product by 50% [#permalink] New post   26 Mar 2012, 01:17
1
Kudos
1
Bookmarks
Expert Reply
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.
User avatar
L
Bunuel
Math Expert
Joined: 02 Sep 2009
Posts: 92883
Own Kudos [?]: 618603 [1]
Given Kudos: 81563
Send PM
CAT Tests Forum Quiz Mode
Re: A company decreased the price of its main product by 50% [#permalink] New post   18 Nov 2013, 06:57
1
Kudos
Expert Reply
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=
(200-100/100)(100)=100% increase

Price decrease=
(100-50/50)=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: (100-50)/100=0.5.

Hope it's clear.
User avatar
manalq8
Manager
Manager
Joined: 12 Apr 2011
Status:D-Day is on February 10th. and I am not stressed
Affiliations: American Management association, American Association of financial accountants
Posts: 118
Own Kudos [?]: 1848 [0]
Given Kudos: 52
Location: Kuwait
Concentration: finance and international business
Schools:Columbia university
 Q18  V17 GMAT 2: 320  Q18  V19 GMAT 3: 620  Q42  V33
GPA: 3.48
Send PM
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 :)
User avatar
calreg11
Manager
Manager
Joined: 27 Oct 2011
Posts: 85
Own Kudos [?]: 908 [0]
Given Kudos: 4
Location: United States
Concentration: Finance, Strategy
Schools: HBS '15 (D) Marshall '15 (II) Anderson '15 (S) Stanford '15 (S) Haas '15 (S)
GPA: 3.7
WE:Account Management (Consumer Products)
Send PM
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.
D
avatar
Abhii46
Manager
Manager
Joined: 12 Mar 2012
Posts: 66
Own Kudos [?]: 523 [0]
Given Kudos: 22
Location: India
Concentration: Technology, Strategy
Schools: ISB '15 HKUST '16 Kelley '16 NUS '15 Duke '16
GMAT 1: 710 Q49 V36
GPA: 3.2
WE:Information Technology (Computer Software)
Send PM
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.
avatar
fukirua
Intern
Intern
Joined: 21 Oct 2012
Posts: 19
Own Kudos [?]: 66 [0]
Given Kudos: 15
GMAT Date: 01-19-2013
Send PM
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.
avatar
sarahmichalmoore
Intern
Intern
Joined: 14 Sep 2013
Posts: 2
Own Kudos [?]: [0]
Given Kudos: 2
Send PM
Re: A company decreased the price of its main product by 50% [#permalink] New post   18 Nov 2013, 06:53
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=
(200-100/100)(100)=100% increase

Price decrease=
(100-50/50)=100% decrease

100/100=1

I know this is wrong, but can someone please help me understand why?
avatar
sarahmichalmoore
Intern
Intern
Joined: 14 Sep 2013
Posts: 2
Own Kudos [?]: [0]
Given Kudos: 2
Send PM
Re: A company decreased the price of its main product by 50% [#permalink] New post   18 Nov 2013, 13:14
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=
(200-100/100)(100)=100% increase

Price decrease=
(100-50/50)=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: (100-50)/100=0.5.

Hope it's clear.



yes it is. I made a very silly mistake. Thank you so much for clarifying!
avatar
unceldolan
Manager
Manager
Joined: 21 Oct 2013
Posts: 154
Own Kudos [?]: 212 [0]
Given Kudos: 19
Location: Germany
Schools: Owen '17 (A$) Sauder '17 (A$) Schulich '17 (WD) Anderson FEMBA '17 (S) McDonough '17 (A) Desautels '17 (S)
GMAT 1: 660 Q45 V36
GPA: 3.51
Send PM
Re: A company decreased the price of its main product by 50% [#permalink] New post   02 Jun 2014, 23:44
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.
User avatar
ash99
Intern
Intern
Joined: 12 Apr 2013
Posts: 19
Own Kudos [?]: 118 [1]
Given Kudos: 20
Concentration: Entrepreneurship, Strategy
Send PM
Reviews Badge
A company decreased the price of its main product by 50% [#permalink] New post   11 Aug 2015, 04:35
1
Bookmarks
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)
avatar
B
mbaapp1234
Manager
Manager
Joined: 23 Dec 2013
Posts: 86
Own Kudos [?]: 81 [0]
Given Kudos: 23
Location: United States (CA)
Schools: HBS '20 (D) Stanford '20 (D) Yale '21 (A$) Tuck '21 (A) Wharton '21 (A) Sloan '21 (A)
GMAT 1: 710 Q45 V41
GMAT 2: 760 Q49 V44
GPA: 3.76
Send PM
Reviews Badge
Re: A company decreased the price of its main product by 50% [#permalink] New post   21 May 2017, 17:44
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).
User avatar
G
laddaboy
Manager
Manager
Joined: 22 May 2015
Posts: 108
Own Kudos [?]: 102 [0]
Given Kudos: 26
Send PM
Re: A company decreased the price of its main product by 50% [#permalink] New post   31 Jan 2018, 07:45
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
User avatar
D
shashankism
Director
Director
Joined: 13 Mar 2017
Affiliations: IIT Dhanbad
Posts: 628
Own Kudos [?]: 589 [0]
Given Kudos: 88
Location: India
Concentration: General Management, Entrepreneurship
GPA: 3.8
WE:Engineering (Energy and Utilities)
Send PM
Re: A company decreased the price of its main product by 50% [#permalink] New post   10 Jun 2019, 04:50
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


Let the price of product be Rs. 100. It is decreased by 50% to Rs. 50
Let the no. of products initially sold be 10 and after price decrease be 10k.

So, (100)(x) = (50)(10k)
k = 2

So, after price decrease 20 nos. of products are sold.

So, increase in sale = (20-10)/10 = 100%
Decrease in price= 50%

Ratio = 100/50 = 2.0

Answer D
User avatar
L
ScottTargetTestPrep
Target Test Prep Representative
Joined: 14 Oct 2015
Status:Founder & CEO
Affiliations: Target Test Prep
Posts: 18753
Own Kudos [?]: 22041 [0]
Given Kudos: 283
Location: United States (CA)
Send PM
Re: A company decreased the price of its main product by 50% [#permalink] New post   25 Aug 2019, 18:51
Expert Reply
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


Since the company decreased the price of its product by 50% = 1/2, in order to keep the revenue the same, the number of units sold would need to be 2 times what was sold previously, or a 100% increase, which is 1.

Thus, the ratio of the percent increase in units sold to the percent decrease in price is:

(1)/(1/2) = 2

Answer: D
User avatar
D
bv8562
Senior Manager
Senior Manager
Joined: 01 Dec 2020
Posts: 480
Own Kudos [?]: 373 [0]
Given Kudos: 359
GMAT 1: 680 Q48 V35
Re: A company decreased the price of its main product by 50% [#permalink] New post   08 Jun 2021, 09:02
Original Price = p
No. of units sold = n

Revenue = Price * No. of units sold = p*n

Decreased Price = 0.5p
No. of units sold = n+k

Revenue = 0.5p*(n+k)

Since, both the times the revenue remained the same:

p*n = 0.5p*(n+k)

n:k = 1:1

When the Price was p, the no. of units sold were = n = 1
When the Price was 0.5p, the no. of units sold were = n+k = 1+1 = 2

% increase in the no. of units sold = 1/1*100 = 100%

Ratio = No. of units sold/% decrease of price = 100%/50% = 2 (D)
User avatar
bumpbot
Non-Human User
Joined: 09 Sep 2013
Posts: 32630
Own Kudos [?]: 821 [0]
Given Kudos: 0
Send PM
Re: A company decreased the price of its main product by 50% [#permalink] New post   15 Jul 2022, 07:19
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.
GMAT Club Bot
gmatclubot
Re: A company decreased the price of its main product by 50% [#permalink]
15 Jul 2022, 07:19
Moderators:
Bunuel
Math Expert
92883 posts
yashikaaggarwal
Senior Moderator - Masters Forum
3137 posts

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne
Main navigation
GMAT Resources
Partners
MBA Resources
www.gmac.com|www.mba.com | | GMAT Club Rules | Terms and Conditions