The price of an article is reduced by 40% and its sale is increased by 80%. Find the net effect on revenue.
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 8% increase.
Let original price = 100, original quantity = 100
Original revenue = 100 × 100 = 10000
New price = 100 − 40 = 60
New quantity = 100 + 80 = 180
New revenue = 60 × 180 = 10800
Net effect on revenue = 10800 − 10000 = 800
Percentage increase = (800 ÷ 10000) × 100 = 8%
Net effect = 8% increase