PSA_LEVEL-UP_QNR13. A merchant makes a profit of 20% by selling an article. What would be the percentage change in profit percent had he paid 10% less for it and the customer paid 10% more for it?
Ans. If Selling price (SP) and Cost Price (CP) are given, ratio of SP & CP gives an idea of the profit. If SP=15, CP=10, SP/CP= 1.5 that indicates 50% profit.
Using the above concept, in the first scenario,
SP/CP = 1.2 [Indicating 20% profit]
In the second scenario,
SP becomes 10% more i.e. 1.1SP.
CP becomes 10% less i.e. 0.9CP
Now the ratio becomes 1.1SP/0.9CP
This indicates profit % now is = 46.66.
Earlier profit %= 20
So, what is the percentage change [Calculation Technique]?
20 when increased by 100% [or added to itself], it becomes 40. We need to reach 6.66 more.
10% of 20 is 2. To reach say 6, we need 3 steps of 10% to make it 6 (=3*2). Thus, we added 30% to reach 46. Profit percentage change is 130% and we reach 46. Since, we have to get 0.66 more, the answer would be a little bit on the higher side of 130. Option c) 133.33%