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Solutions
Formula used:
% change in revenue = (New revenue - Initial revenue) / Initial revenue] × 100
Calculation:
Let's assume the initial price of the product is 100 Rs & initial items sold out be 100 units.
New price = 100 - (12% of 100) = 100 - 12 = 88 Rs.
Initial number sold increase = 100
New number sold = 100 + (24% of 100) = 100 + 24 = 124 units
Initial total revenue = Initial price × Initial number sold
⇒ 100 × 100 = 10,000 Rs
New total revenue = 88 × 124 = 10,912 Rs.
% change in revenue = (New revenue - Initial revenue) / Initial revenue] × 100
⇒ [(10,912 - 10,000) / 10,000] × 100
⇒ [912 / 10,000] × 100 = 9.12%
Therefore, the effect on total revenue is an increase of approximately 9.12%.