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Quantitative Reasoning – Practice – Profit and More Profit!

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?

a) 130%
b) 125%
c) 133.33%
d) 120%

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

= 1.1*1.2/0.9
=1.32/0.9
=132/90
= 1.4666

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%

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