When a plaything's cost rose by 20%, the quantity of units sold dropped by 15%. What impact did this have on the retail outlet's total revenue?
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Answer: C. 2 % increase
Explanation
Increasing the price by 20 percent scales the price factor to 1.20 of its original baseline. A 15 percent drop in quantity sold scales the quantity factor down to 0.85 of its original level. Multiplying 1.20 by 0.85 gives a net revenue factor of 1.02, representing a 2 percent increase in total revenue. Total sales revenue is calculated by multiplying unit retail price by the total quantity of units sold. Net percentage changes from simultaneous price and quantity shifts are found by multiplying their decimal scaling factors. A scaling factor greater than one indicates a net percentage increase, while a factor below one indicates a decrease.
Option A overestimates the net revenue growth by miscalculating the product of the price and quantity factors. Option B incorrectly suggests a revenue decrease, ignoring the positive net multiplier product of 1.02. Option D represents an incorrect subtraction error when evaluating the final decimal scaling factor.
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- Mathematics
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- Mathematics
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- —
- Difficulty
- medium
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