A retailer acquires items at a cost of N dollars apiece, sells them on

Let N = $100


Selling Price is a 40% markup ——> $140

Shipping costs are 10% of the selling price —-> $14

Original net profit:

$140 - ($114) = $26

Now, shipping costs increase an extra 2% of the selling price (which is still $140)

10% of 140 ———> 14.0

1% of 140 ———-> 1.40

(1.4) * 2 = 2.8

Thus our costs have risen to 116.80

If we boost the costs up to 117, the percentage decrease in gross profit will be an overestimate (cost should be a bit lower so we are making it a little worse than it actually is)

New estimated gross profit = 140 - 117 = $23


Percentage decrease in gross profit ——-> we can look at the fractional decrease

(23 - 26) / 26 =

- (3/26)

A 10% decrease in the original net profit would have represented a decrease (NUM) of -2.6 on and original gross profit of 26

Even with our overestimate of costs, the gross profit decrease is still greater than 10%

E

Greater than 10%

Note: question is asking for the percentage decrease in net profit - not the profit percentage

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This question is a part of Are You Up For the Challenge: 700 Level Questions collection.

x1 + y1 + z1 = 100 ;........1

x2 + y2 +z2 = 100 ;..........2

x1 +10 = y1 ;...........3
y2 = 5z2 ;....................4

x2 =1.2x1 , y2 =1.2y1 .......5

Solving 1 to 5 we get
3/26*100 greataer than 10

Therefore IMO E

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