Question

If prices are reduced 25% and sales increase 20%, what is the net effect on gross receipts?


What is the net effect? and how do you get it?

Answer 1

Reduced by 25% is the same a multiplied by 0.75. Increased by 20% is the same as multiplied by 1.20. Multiply the two multipliers together to get the net effect.

Answer 2

how is increased by 20% is same as multiplied by 1.2?
and one % is on the sale and the other is on the price itself, how can I work with a problem like that?

Answer 3

If I sell 100 things a day and sales go up 20% I sell 120 things a day. That is the same as multiplying sales by 1.20.

Gross Receipts = Sales Price * Number of units sold. If I change Sales Price and Number of units sold each by simple multipliers, the effect on Gross Receipts will be the product of the multipliers.

Answer 4

Let GR = Gross Receipts; S = Sales; and P = Price. Then:
GR = S * P
Now lets change price to 0.75*P and lets change S to 1.20*S. Now, let NGR = New Gross Receipts and:
NGR = 0.75*P * S to 1.20*S

Answer 5

Oops, NGR = 0.75*P * 1.20*S

Answer 6

perfect!!! now what?

Answer 7

how do we get the effect?

Answer 8

Multiply the Multipliers together. This will give you the net multiplier.

Answer 9

soit's 90%?

Answer 10

New gross receipts will be 90% of old gross receipts, yes. You might also say "Gross Receipts will go down by 10%"

Answer 11

ok thanks

Answer 12

Cheers