When the price of cloth was reduce by 25%, the quantity of cloth sold increased by 20%. What was the effect on gross receipt of the shop?

Explanation

Let initial Volume sold = x units Original Selling Price = Rs. y => Total Revenue = Volume × Selling Price = xy 120 New Volume Sold = 100 × x = 1.2x units 75 New Selling Price = 100 × y = Rs. 0.75y => Total Revenue = 1.20x × 0.75y = 0.9xy (xy−0.9xy) ∴ % decrease in revenue = xy × 100 = 0.1 × 100 = 10%