If price decreases by 6% and quantity increases by 12%, what is the approximate net percent change in revenue, assuming the same multiplicative model as the other problem?

• A. -5.3%
• B. 0%
• C. 5.3%
• D. 12%

Answer: (C)

Revenue comes from price times quantity, so when both change, you multiply their effects. A 6% drop in price means you keep 94% of each unit’s revenue, and a 12% rise in quantity means you gain 112% of the revenue from each unit sold. Multiply these factors: 0.94 × 1.12 = 1.0528. The net change is 1.0528 − 1 = 0.0528, which is about a 5.28% increase in revenue, i.e., 5.3%.