Question : When the price of an article was increased by 5% its sale reduced by 10%. What was the net effect on the revenue?
Option 1: 5% increase
Option 2: 5.5% decrease
Option 3: 5.5% increase
Option 4: 5% decrease
Correct Answer: 5.5% decrease
Solution :
Given: the price of an article was increased by 5% its sale was reduced by 10%.
Let the price increase be $a$% and the sale reduction be $b$%,
So, the net effect on revenue = $a-b-\frac{ab}{100}$
= $5-10-\frac{5×10}{100}$
= $-5-0.5$
= $-5.5$%
A negative sign implies that revenue will decrease.
Hence, the correct answer is 5.5% decrease.
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