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Maths question - easy points

Posted on 2016-08-12
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Last Modified: 2016-08-23
I'm having a dispute with a collegue over the answer to the question.

Can anyone help validate my answer - please show your working

maths Q
Thanks Mike
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Question by:mikes6058
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Assisted Solution

by:Russ Suter
Russ Suter earned 83 total points
ID: 41754015
This really does look like you're asking the experts to do your homework for you.
http://support.experts-exchange.com/customer/portal/articles/1435136-can-i-get-help-with-my-homework-question-?b_id=44
May I suggest that you post both your answer and your collegue's answer (with work shown) and allow the experts to validate that way?
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by:mikes6058
ID: 41754019
workings
Answer D
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by:awed1
awed1 earned 83 total points
ID: 41754068
Hm. I thought it was c.

a. 116 X 1.07 = 124.12
b. 89 X 1.05  =  93.45
c. 125 X 1.02 = 127.5
d. 76 X 1.17  = 88.92

assumed an Initial price 100 to make the Math easier.
new price is indicated in the first +-column
increased market share, initial market share represented by 1 and increased market share is indicated by 1 plus the difference in percentage between the initial market share and the final market share, is indicated in second =- column
Total shows revenue which is adjusted price times increased market share.
Highest revenue increase should be c.

I don't know anything about accounting and my Math skills are limited, but I thought I'd try this for fun.
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by:d-glitch
d-glitch earned 83 total points
ID: 41754072
It is a very slippery question.  They start off talking about increasing profit and then switch to maximum change in revenue.

D is the right answer for maximum revenue.  
But I would certainly rather be C, who maganged to increase price and market share.

If you want to talk profit, you would need the cost of goods to each company.
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by:awed1
awed1 earned 83 total points
ID: 41754074
I disagree. It is asking about increase in revenue.
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by:d-glitch
d-glitch earned 83 total points
ID: 41754083
Read the first line of the question.
. . . changed retail prices in order to increase their profits.
I am only pointing out why it might be confusing.
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by:awed1
awed1 earned 83 total points
ID: 41754099
yes to know about profits, you would have to know about the difference between what it costs them and how much they bring in from it. It did look slippery from the get-go. but it definitely asked about increase in revenue, the definition of which I had to look up, and it seems to have a main definition of total income not total profit.
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Assisted Solution

by:mikes6058
mikes6058 earned 0 total points
ID: 41754127
D-glitch you have interpreted the question correctly. Would you be able to show your working for answer D?

Or anyone else with the same answer
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Accepted Solution

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Wayne Herbert earned 251 total points
ID: 41754137
Company A experienced the greatest increase in revenue in absolute dollar terms.  Company D experienced the greatest percentage increase in revenue.  

Missing from this problem is the actual market volume.  The answer above is correct only if the total market volume remains the same.  The four companies combined have a total Before Share of 67 percent, and a total After Share of 98 percent.  Pity poor Company E (not shown) whose market share went from 33 percent to 2 percent.  If you increase total units, the numbers change.

Anyway the table shows the details.school.png
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Expert Comment

by:d-glitch
ID: 41754147
I would go with Wayne who has identified yet another issue with this horrible pseudo ecconomic question.
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Assisted Solution

by:awed1
awed1 earned 83 total points
ID: 41754217
Oh, Okay, So the answer is D.

Going from what Wayne said, I can look at the market share a different way.
Previously, I had counted it as 1 representing whatever percentage of the total 100%, the market share, the company started with.

But, if instead, we look at it as a number, the answer becomes D. let's say that 100% of the market share is a number. Let's say all of the units that are bought are a total of X.

A starts with .18X and ends with .25X  116 X .07X = 8.12%X  
B starts with .08X and ends with .13X  89 X .05X =  4.45%X    
C Starts with .27X and ends with .29X  125 X .02X=  2.5%X  
D starts with .14X and ends with .31X  76 X .17X = 12.92%X

This shows the increased percentage of X that each company sold.
X is the total number of sales in the market.
So the increase of revenue is greatest for D.

You win!
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Expert Comment

by:d-glitch
ID: 41754266
There are no winners.  We are all victims of bad pedagogy.
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