A broker's income remains unchanged even though commission rates rise from 4% to 5%. What is the percentage slump in business_______?
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Answer: C. 20 %
Explanation
Broker income equals total business volume multiplied by the active commission percentage rate. Equating constant income for four percent and five percent rates shows new business is four-fifths of original. A drop from five parts to four parts represents a fractional business slump of one-fifth or twenty percent. Inverse proportionality applies when the product of two variables remains constant during changes. Commission rate increases require a corresponding reduction in sales volume to maintain equal total earnings. Fractional reductions convert directly into percentage decreases by multiplying by one hundred.
Sales managers analyze commission structures to understand how fee adjustments affect trading volume. Real estate brokers evaluate market elasticity when commission rates fluctuate in competitive environments. Understanding inverse relationships helps professionals forecast revenue under changing market conditions. Option A suggests eight percent which miscalculates the inverse proportional business reduction. Option B suggests one percent which confuses the rate difference with the business volume slump. Option D suggests eighty percent which represents the remaining business volume rather than the slump.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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