Question

When a tour company reduces their fees by 25%, the number of customers increases by 25%. What kind of change does the company gain? (specify the% change)

Answer 1

Ans:

When a company reduce its fees and Customer increase by 25%. Overall Company Gain reduced by 6.25%.

For example : Let company current fees per customer is $100 and Existing customers of company are 500. So total revenue for the company : $100*500 = $50,000.

Now if Fees reduced by 25% i.e $100 - 25% = $75. customers will increase by 25% i.e 500 + 25% = 625. So total revenue for the company : $75*625 = $46,875.

Overall Loss : $50,000 - $46,875 = $3,125.

Loss in % terms : $3,125 / $50,000 = (6.25%)

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