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Instructions

Answer the questions based on the following two graphs, assuming that there is no fixed cost component and all the units produced are sold in the same year.

Year wise graph of revenue and total profit.

Question 85

If the price per unit decreases by 20% during 2000-2004 and cost per unit increases by 20% during 2005-2010, then the cumulative profit for the entire period 2000-2010 decreases by:

Solution

Let's calculate No of Units as Revenue / Unit price.

Per Unit cost as (Revenue - Profit ) / No of Units.

Costs Incurred = Revenue - Profit

In that way, we calculate the table as follows.

Profit before the changes=1700

Profit after the changes= 150

Cumulative change in the profit = 1550

Hence B is the correct answer.

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