Question

When the price of a watch is increased by 25%,the quantity sold was decreased by 20%.what was the net effect

Answer 1

Answer:

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Answer 2

Given that:-

• The price of watch was increased by 25%.

• The quantity sold was decreased by 20%.

Concept used:-

• Price × Quantity = Revenue

Solution:-

Let us assume that,

• Initial price of watch = Rs.10
• Initial quantity = 10

Then:-

Initial Price × Quantity Price = Initial Revenue

Initial Revenue = 10 × 10

= 100

Now:-

New price of watch = Initial price + 25% of Initial price

New price of watch = 10 + 25% of 10

New price of watch = 10 + (25 × 10/100)

New price of watch = 10 + 2.5

New price of watch = Rs. 12.5

Similarly:-

New quantity = Initial quantity - 20% of Initial quantity

New quantity = 10 - 20% of 10

New quantity = 10 - (20 × 10/100)

New quantity = 10 - 2

New quantity = 8

Therefore:-

New revenue = New price × New quantity

New revenue = 12.5 × 8

New revenue = 100

Since:-

Initial revenue = New revenue

Net was No profit and No loss.