The owner of a bakery decides to drop the price of lemon cakes by 5%,how much does quantity sold have to rise to stop the revenue from decreasing
A)2%
B)3%
C)4%
D)5%

Question

​The owner of a bakery decides to drop the price of lemon cakes by 5%,how much does quantity sold have to rise to stop the revenue from decreasing
A)​2%
B)3%
C)4%
D)​5%

Quizplus · Accepted Answer

To maintain the same revenue, the percentage increase in quantity sold must offset the percentage decrease in price. The formula to calculate the required increase in quantity is: (Percentage decrease in price / (100% - Percentage decrease in price)) * 100%. Plugging in the 5% decrease gives us (5 / (100 - 5)) * 100% = 5.26%. Since the options are rounded, a 5% increase in quantity sold is the closest to maintaining revenue.

​The Owner of a Bakery Decides to Drop the Price

The Owner of a Bakery Decides to Drop the Price