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If prices reduce by 20% and sales increase by 15%, what is the net effect on gross receipts?
- a)They increase by 8%.
- b)They decrease by 8%.
- c)They remain the same.
- d)They increase by 1.
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
If prices reduce by 20% and sales increase by 15%, what is the net ef...
Let original price = p, and original sales = s. Therefore, original gross receipts = ps.
Let new price = 0.80p, and new sales = 1.15s. Therefore, new gross receipts = 0.92ps.
Gross receipts are only 92% of what they were. Hence, gross receipts decrease by 8%.
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If prices reduce by 20% and sales increase by 15%, what is the net ef...
Explanation:
To find the net effect on gross receipts, we need to consider the changes in prices and sales separately and then calculate the overall effect.
Effect of a 20% price reduction:
When the prices reduce by 20%, it means the new price will be 80% of the original price.
Let's assume the original price is 100 units. After the 20% reduction, the new price will be 80 units.
Effect of a 15% increase in sales:
To calculate the effect of a 15% increase in sales, we need to multiply the original sales by 1.15.
Let's assume the original sales are 100 units. After a 15% increase, the new sales will be 115 units.
Calculating the net effect on gross receipts:
To calculate the net effect on gross receipts, we need to multiply the new price by the new sales.
New Price = 80 units
New Sales = 115 units
Gross Receipts = New Price x New Sales
Gross Receipts = 80 units x 115 units
Gross Receipts = 9200 units
So, the net effect on gross receipts is a decrease of 8%, as the gross receipts decreased from 10000 units to 9200 units. Therefore, the correct answer is option B) They decrease by 8%.
To find the net effect on gross receipts, we need to consider the changes in prices and sales separately and then calculate the overall effect.
Effect of a 20% price reduction:
When the prices reduce by 20%, it means the new price will be 80% of the original price.
Let's assume the original price is 100 units. After the 20% reduction, the new price will be 80 units.
Effect of a 15% increase in sales:
To calculate the effect of a 15% increase in sales, we need to multiply the original sales by 1.15.
Let's assume the original sales are 100 units. After a 15% increase, the new sales will be 115 units.
Calculating the net effect on gross receipts:
To calculate the net effect on gross receipts, we need to multiply the new price by the new sales.
New Price = 80 units
New Sales = 115 units
Gross Receipts = New Price x New Sales
Gross Receipts = 80 units x 115 units
Gross Receipts = 9200 units
So, the net effect on gross receipts is a decrease of 8%, as the gross receipts decreased from 10000 units to 9200 units. Therefore, the correct answer is option B) They decrease by 8%.
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If prices reduce by 20% and sales increase by 15%, what is the net effect on gross receipts?a)They increase by 8%.b)They decrease by 8%.c)They remain the same.d)They increase by 1.Correct answer is option 'B'. Can you explain this answer?
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