Answer to Question #97792 in Algebra for mani

Question

The import duty on a certain electronic product increased by 20%. the demand for it thereby reduced by 10% is there a percentage increase or decrease in revenue and by how much?

Answer 1

$Q_0 = K_0*P$ is the revenue before changes.

After increasing the import duty by 20% the product price will be $P+0.2P=1.2P$ and after a reduction the demand will be $K_0-0.1K_0=0.9K_0$ .

After changing the revenue is $Q_n = 1.2P*0.9K_0 = 1.08*K_0*P=1.08Q_o$ .

The difference between the revenues after changes and before changes is $Q_n-Q_0=1.08Q_0-Q_0=0.08Q_0$ .

It means that increase in revenue is 8%.

Answer: increase in revenue is 8%.