If the quantity sold of two-liter Coke bottles increases by 10% when price falls by 2%,what is the total change in revenue?
A)Revenue increases by 12%
B)Revenue increases by 8%
C)Revenue falls by 8%
D)Revenue falls by 12%

Question

If the quantity sold of two-liter Coke bottles increases by 10% when price falls by 2%,what is the total change in revenue?
A)​Revenue increases by 12%
B)Revenue increases by 8%
C)Revenue falls by 8%
D)​Revenue falls by 12%

Quizplus · Accepted Answer

We can use the formula for revenue, which is Revenue = Price x Quantity.

Let R1 be the original revenue and R2 be the new revenue after the changes. Let P1 and Q1 be the original price and quantity sold, and P2 and Q2 be the new price and quantity sold, respectively.

We know that Q2 = 1.1Q1 and P2 = 0.98P1, based on the information given.

Substituting these values into the revenue formula, we get:

R2 = P2 x Q2 = 0.98P1 x 1.1Q1 = 1.078P1Q1

Therefore, the new revenue is 1.078 times the original revenue. The percentage change in revenue is:

(R2 - R1) / R1 x 100% = (1.078R1 - R1) / R1 x 100% = 0.078 x 100% = 7.8%

Since the percentage change is positive, it means that revenue increases. The answer is B: Revenue increases by 8%.

If the Quantity Sold of Two-Liter Coke Bottles Increases by 10