Question

​ If the quantity sold of two-liter Coke bottles increases by 10% when price falls by 2%, what is the total change in revenue?

Answer 1

Answer:

7.8% increase in revenue

Explanation:

Revenue is given by the number of units sold 'n' multiplied by the price of sale 'P'. The revenues before and after the price drop are:

$R_{old} = P*n\\R_{new} = (1-0.02)P*(1+0.1)n=1.078P*n$

The change in revenue is given by:

$R_{new} = 1.078R_{old}\\\Delta R=1.078-1 = 0.078 = 7.8\%$

Therefore, there was a 7.8% increase in revenue when price falls by 2%.