Price down, sales up — Percentages Aptitude Question
Price down, sales up: The price of an article is reduced by 20% and its sales rise by 30%. Answer and worked solution on CodeKairo.
- Topic: Percentages
- Section: Quantitative Aptitude
- Difficulty: Medium
- Time target: 50 seconds
Question
The price of an article is reduced by 20% and its sales rise by 30%. What is the net effect on revenue?
Options
- 4% increase
- 6% increase
- 10% increase
- 10% decrease
Show the answer and the worked solution
Correct answer: A. 4% increase
Worked solution
- Revenue factor = 0.80 × 1.30 = 1.04.
- That is a 4% increase.
Answer: 4% increase.
The idea
Two percentage changes on a product multiply: a% and b% give a net of a + b + ab/100. Here −20 + 30 − 6 = +4.
Shortcut. 0.8 × 1.3 is 8 × 13 = 104 hundredths, so revenue ends at 104% — up 4%.
Common trap. "10% increase" — adding −20% and +30% without the cross term (−20 × 30/100 = −6).