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If prices are reduced 25% and sales increase 20%, what is the net eff

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If prices are reduced 25% and sales increase 20%, what is the net eff  [#permalink]

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New post 27 Feb 2018, 22:52
00:00
A
B
C
D
E

Difficulty:

  25% (medium)

Question Stats:

85% (01:09) correct 15% (01:34) wrong based on 27 sessions

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If prices are reduced 25% and sales increase 20%, what is the net effect on gross receipts?

(A) They increase by 5%.

(B) They decrease by 5%.

(C) They remain the same.

(D) They increase by 10%.

(E) They decrease by 10%.

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Re: If prices are reduced 25% and sales increase 20%, what is the net eff  [#permalink]

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New post 27 Feb 2018, 22:58
Let the price be $100
And sales be 100 units

New Price = $75
New sales = 120

Therefore
{(75*120)-(100*100)}/(100*100)
=- 10%
So answer should be E .
Decrease by 10%



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Re: If prices are reduced 25% and sales increase 20%, what is the net eff  [#permalink]

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New post 28 Feb 2018, 15:03
Multiplier method.

25% discount = 0.75 multiplier
20% increase = 1.2 multiplier

1.2 * 0.75 = 0.90 [If the product of two multipliers is less than 1, it is a decrease]

1-0.90 = 10%
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Re: If prices are reduced 25% and sales increase 20%, what is the net eff &nbs [#permalink] 28 Feb 2018, 15:03
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If prices are reduced 25% and sales increase 20%, what is the net eff

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