Graph - Revenue

Revenue for 2003 = 10 * 10,000 = 100,000

Revenue for 2006 = 18 * (0.8*0.8*0.8*10,000) = 18 * 5120 = 92,160
"price dropped by 20% each year" --> price of each year is 80% of previous year --> 0.8 * previous year

% decrease in 2006 compared to 2003 = ((Revenue for 2003 - Revenue for 2006)/Revenue for 2003)*100

= ((100,000 - 92,160)/100,000)*100 = 7.84%

"compared to 2003" --> revenue for 2003 is the point of reference and hence, the revenue for 2003 should be in the denominator.

pradeepspanchal wrote:The graph below shows the number of cars sold by a certain company over a four year period. Price of single car in the year 2003 was $10000 and thereafter the price dropped by 20% each year. What is the percentage decrease in revenue in 2006 as compared to 2003 (Revenue = Number of cars sold × price per car)?

a. 10
b. 20
c. 7.8
d. 8.5
e None


I am getting the positive revenue , that is increase in revenue rather than decrease. Please help.

To make the math easier:

-- we can plug in our own value for the initial price.
-- instead of determining the revenue for 10,000 cars sold in 2003 and 18,000 cars sold in 2006, we can determine the revenue for 10 cars sold in 2003 and for 18 cars sold in 2006.

Plug in 2003 price = 125.
Thus, revenue in 2003 = 10*125 = 1250.

The formula for repeated percent change is:

Final amount = Original Amount * (1 - percent decrease written as fraction)^number of changes

In the problem above:
Original amount = 125
1 - percent decrease written as fraction = 1 - 2/10 = 8/10 = 4/5
Number of changes = 3 (Since the price changes every year for 3 years)

Thus, 2006 price = 125 * (4/5)^3 = 125*(64/125) = 64.
Revenue in 2006 = 18*64 = 1152.

Percent decrease = (old price-new price)/(old price) * 100 = (1250-1152)/1250 * 100 = 7.84.

The correct answer is D.

Thanks everyone. Taking 10 % instead of 20 %.

I am doing reading mistakes. Is any way to eliminate reading mistakes.