A furniture store owner decided to drop the price of her recliners by

This question can also be done without picking numbers, and knowing how to approach it both ways will help you on test day if you run into a question where picking numbers isn't so straightforward or leads to messy calculations.

Gross (sales revenue) = units sold * selling price = Q*P
We are told that the selling price is decreased by 20% --> new selling price = (1-0.2)P = 0.8P
We are told that the quantity sold increases by 50% --> new quantity sold = 1.5Q
New Gross = 1.5Q*0.8P = 1.2QP

With the New Gross = 1.2QP, you should be able to see that the increase in the Gross is 20%

Answer C

If you want to check to make sure your brain isn't doing funny things, a quick calculation for the % increase can be done

Percent increase in the Gross = \(\frac{New Gross - Old Gross}{Old Gross}\)

\(= \frac{(1.2QP-QP)}{QP} = 0.2 = 20\)%

Assume the price of each recliner = 100 and Total recliners sold = 100
Total income = 100*100

After the discount,
Price of each recliner = 80
Number of recliners sold = 150
New total income = 80*150 = 12000

Percentage increase =\(\frac{{new - old}}{{old}}\)* 100

Percentage increase =\(\frac{{(12000 - 10000)}}{10000}\) *100 = (2000/10000) * 100 = 20%
Option C

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