Because of scarcity of rainfall, the price of a land decreases by 12% and its production also decreases by 4%. What is the total effect on revenue?

Options

A. Loss of 16%
B. Gain of 15%
C. Loss of 15.48%
D. Loss of 15.52%

Answer

To solve the problem step by step, we will analyze the effects of the decrease in price and production on the revenue.

### Step 1: Understand the Initial Revenue
Let's assume the initial revenue is represented as 100 units.

### Step 2: Calculate the Effect of Price Decrease
The price of the land decreases by 12%. This means the new price will be:
- New Price = Initial Price - (12% of Initial Price)
- New Price = 100 - (12/100 * 100) = 100 - 12 = 88 units.

### Step 3: Calculate the Effect of Production Decrease
The production decreases by 4%. This means the new production will be:
- New Production = Initial Production - (4% of Initial Production)
- New Production = 100 - (4/100 * 100) = 100 - 4 = 96 units.

### Step 4: Calculate the New Revenue
Now, we need to calculate the new revenue based on the new price and new production:
- New Revenue = New Price * New Production
- New Revenue = 88 * 96 = 8448 units.

### Step 5: Find the Decrease in Revenue
Now, we will find the decrease in revenue from the initial revenue:
- Decrease in Revenue = Initial Revenue - New Revenue
- Decrease in Revenue = 100 - 84.48 = 15.52 units.

### Step 6: Calculate the Percentage Decrease in Revenue
To find the percentage decrease in revenue, we use the formula:
- Percentage Decrease = (Decrease in Revenue / Initial Revenue) * 100
- Percentage Decrease = (15.52 / 100) * 100 = 15.52%.

### Final Answer
The total effect on revenue is a decrease of **15.52%**.

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