Penny works for a cake factory selling only cakes.Whenever the shop offers a 10%
ID: 2766287 • Letter: P
Question
Penny works for a cake factory selling only cakes.Whenever the shop offers a 10% discount the sales volume increases by 11%Penny believes the shop should offer a permanent 10% discount to increase sales. The manager regected the idea, but one month later comes up with another idea to ofeer a 5% discount on cakes to increase overall sales by 6%. This time the manager accepts her idea.
Why?
the manager is wrong in her decision both times
the manager is wrong the first time and right the second time
the manager is right the first time and wrong the second
the manager is right both times
Explanation / Answer
option 1 option 2 selling price 10 10 selling volume 100 100 selling value 1000 1000 new selling price 9 9.5 new selling volume 110 106 Sales value 990 1007 As can be seen from the above calculations , when prices are decreased by 10% and sales increased by 11% , the total value of sales decrease from the original value Hence , manager was right to negate the proposal When prices are decrease by 5% and sales increased by 6% the total value of sales increase from the original value Hence , manager was right to accept the proposal The manager was right both times The last option is correct
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