1. Penny works for a cake factory shop which sells only cakes. She informs her manager, Phoebe, that whenever the shop offers a 10% discount in the prices of cakes, the sales volume increases by 11%. Therefore, she believes that the shop should permanently reduce the price by 10% in order to increase the value of the sales. Phoebe rejects the idea. After a month Penny again comes up with another observation. She informs Phoebe that a 5% discount in cake price increases the sales volume by 6%. This time Phoebe accepts her proposal. Explain why.