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A pharmaceutical company received $3 million in royalties

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Joined: 04 Jan 2015
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Re: A pharmaceutical company received $3 million in royalties  [#permalink]

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New post 01 Nov 2018, 21:46
kchen1994 wrote:

Isn't the formula (new - old)/old. why are you writing it (old - new)/old?


Hi,

If you know that it is a decrease, then you need to use (old – new)/old.

And, if you do not know whether it is a decrease or increase, then you need to use (new – old)/old
    • If this value is negative, then we can conclude that it is a decrease
    • If this value is positive, then we can conclude that it is an increase

Since, we are given that it is a decrease, in this question, we can use the formula: (old – new)/old

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e-GMAT
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Re: A pharmaceutical company received $3 million in royalties  [#permalink]

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New post 15 Nov 2018, 21:52
I get the math behind this question, but have a semantic clarification --

Is it safe to assume that when the gmat asks "by what percent did a ratio decrease?" they want a percentage decrease and not an absolute decrease? What if they ask "by what percentage did a percentage decrease?"

In this case, we're talking about a commission, which is almost always stated in percentage terms. In the real world, if you are running a commission based company and your commission goes from 5% to 4%, I think few people would say the decrease was 20% -- they would likely state the decrease in absolute terms, a 1% decrease. Should I basically ban this sort of thinking when taking the GMAT?
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Re: A pharmaceutical company received $3 million in royalties  [#permalink]

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New post 16 Nov 2018, 20:11
Hello, first time poster! Would someone be able to tell me if this way of solving this problem is correct?

So the standard ratio is 3/20 and you want to see with this ratio, how much you should have gotten at 108.

3 = X
20 108

X = 15

Then take the difference in ratios.

15-9 = 6/15 = ~40% which is close to 45
15
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Re: A pharmaceutical company received $3 million in royalties  [#permalink]

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New post 29 Dec 2018, 13:01
Key points -

1. Quick fraction to percentage: 3/20= 15 percent and 09/108= 1/12= 8.33 percent

2. Take advantage of the options since 15 goes down to 8.3, it can not be a slight decrease, hence A & B eliminated. Half of 15 is 7.5 so it can not be more than 50 percent, so options D & E not possible.

The use of analyzing the options before proceeding to the final equation/calculation can save a lot of time.
GMAT Club Bot
Re: A pharmaceutical company received $3 million in royalties &nbs [#permalink] 29 Dec 2018, 13:01

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