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

Expert replies

Previous Topic Next Topic

AAPL: Moderator; Posts: 2647; Joined: Sun Oct 29, 2017 2:08 pmFollowed by: 2 members

by AAPL » Fri Aug 16, 2019 8:36 am

Timer

00:00

Answers

Stats

Difficulty—

Manhattan Prep

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

OA D

Like this post

Source: Beat The GMAT — Problem Solving | Fri Aug 16, 2019 8:36 am

GMAT/MBA Expert

Ian Stewart: GMAT Instructor; Posts: 2623; Joined: Mon Jun 02, 2008 3:17 amFollowed by: 355 members; Location: Montreal; Thanked: 1090 times; GMAT Score:780

by Ian Stewart » Sun Aug 18, 2019 6:01 am

If you cut your prices in half, you'll need to sell twice as many units to make the same revenue. So the number of units sold doubled, or increased by 100%, and we're told the price decreased by 50%. The ratio of 100 to 50 is the same as 2 to 1.

I have no idea why the answer choices are written that way, though - they're not written as ratios, and there's no reason a decimal should appear in the integer answers.

For online GMAT math tutoring, or to buy my higher-level Quant books and problem sets, contact me at ianstewartgmat at gmail.com

ianstewartgmat.com

Like this post

deloitte247: Legendary Member; Posts: 2214; Joined: Fri Mar 02, 2018 2:22 pmFollowed by: 5 members

edited:

by deloitte247 » Sun Aug 18, 2019 8:09 am

For the revenue to remain the same when the price is halved, the number of products sold must double.
Therefore, the increase in the number of products sold = 100%
so, we will have the ratio as 100% / 50% = 2

Answer = D

Like this post

GMAT/MBA Expert

Scott@TargetTestPrep: GMAT Instructor; Posts: 8156; Joined: Sat Apr 25, 2015 10:56 amFollowed by: 29 members; Location: Los Angeles, CA; Thanked: 43 times

by Scott@TargetTestPrep » Sun Aug 25, 2019 5:33 pm

AAPL wrote:Manhattan Prep

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

OA D

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

Scott Woodbury-Stewart
Founder and CEO
[email protected]

See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews

Like this post

Post new topic Post Reply

• Page 1 of 1

GMAT Course Reviews

560 reviews

1168 reviews

431 reviews

359 reviews

147 reviews

5/5

5 Star (560 Reviews)

"Target Test Prep is the closest to the official version of the GMAT exam, about 99% accuracy in terms of the quality and quantity of information. The course has excellently created singular sets of focused lessons and tests for every possible topic that one could come across in the official GMAT exam."

"The TTP course maximizes the efficiency of the time you spend studying. It will take time and effort but I could almost guarantee that if you complete the course exactly as it is laid out you will get an amazing score. They also have a very responsive team willing to help with any questions you might have."

"TTP has two things that I think no other test prep company offers: A teaching approach that reinforces understanding and an attitude that will give you the mental preparedness needed to succeed on the test. TTP gives you a deep understanding of the concept you need to know while teaching you how to think."

Write a Review