Question

If the price of an article is increased by 60%, the number of units sold decreases by 50%, then what is the effect on the sales turnover?

• A. 10% decrease
• B. 40% decrease
• C. 30% decrease
• D. 20% decrease

Answer 1

The correct option is D 20% decrease

Let the initial price of the good be $x$ Rs. and initial stock sale be $y$ units.

Then, Initial Turnover = $x\times y$

After the price is increased by $60\%$, New price = $1.6\times x$

After the units sold decreased by $50\%$, New Stock sale = $0.5\times y$

Thus, New Turnover = $1.6\times 0.5\times x\times y=0.8\times InitialTurnover$ i.e, Turnover decrease by $20\%.$