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complicated question

by engg.manik » Mon Sep 28, 2009 3:29 am
Q-> The revenue of goods is the product of the no. of goods sold & price of each good. By what percentage the price of goods must increase to offset a 20% in the no. of goods sold.
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by mp2437 » Mon Sep 28, 2009 4:46 am
Use numbers.

Say revenue (R) = 100. Since R = n * p, where n = # of goods sold and p = price, just choose some values for n and p, in this case why not n = 50 and p = 2.

R = n * p --> 100 = 50 * 2

Now, it is asking you how much should price increase if n goes down by 20%. So the first thing we need to do is find the new price that is necessary to maintain the same revenue. Since we know that R = 100, and 20% off of n = 50 is 10, our new n = 40.

R = n_new * p_new --> 100 = 40 * p_new --> p_new = 2.5

Now compare the increase in price of the new and the old.

(p_new - p)/ p = (2.5 - 2)/2 = 25%.
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