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A shop purchased a pair of sunglasses for $120 and was

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Joined: 04 Aug 2010
Posts: 278
Schools: Dartmouth College
Re: A shop purchased a pair of sunglasses for $120 and was  [#permalink]

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New post 07 Jul 2018, 03:34
smartass666 wrote:
M07-Q33
A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?
$0
$2
$4
$6
$8


Since the markup is equal to \(\frac{1}{4}\) of the original selling price, and the original selling price is discounted by \(\frac{1}{5}\), the original selling price must be a multiple of 4 and 5 -- in other words, a MULTIPLE OF 20 -- that is greater than the $120 purchase price:
140, 160, 180...

The answer choices indicate that the discounted selling price yields a profit between $0 and $8, inclusive.
Implication:
Reducing one of the values above by \(\frac{1}{5}\) must yield a discounted selling price between $120 and $128, inclusive.

Only the green option is viable:
\(160 - \frac{1}{5}*160 = 160 - 32 = 128.\)
Since the discounted selling price = 128, the profit = 128-120 = 8.


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A shop purchased a pair of sunglasses for $120 and was  [#permalink]

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New post 07 Jul 2018, 04:31
GMATGuruNY wrote:
smartass666 wrote:
M07-Q33
A shop purchased a pair of sunglasses for $120 and was selling it at a price that equaled the purchase price of the sunglasses plus a markup that was 25 percent of the selling price. After some time a shop owner decided to decrease the selling price by 20 percent. What was the shop's gross profit on this sale?
$0
$2
$4
$6
$8


Since the markup is equal to \(\frac{1}{4}\) of the original selling price, and the original selling price is discounted by \(\frac{1}{5}\), the original selling price must be a multiple of 4 and 5 -- in other words, a MULTIPLE OF 20 -- that is greater than the $120 purchase price:
140, 160, 180...

The answer choices indicate that the discounted selling price yields a profit between $0 and $8, inclusive.
Implication:
Reducing one of the values above by \(\frac{1}{5}\) must yield a discounted selling price between $120 and $128, inclusive.

Only the green option is viable:
\(160 - \frac{1}{5}*160 = 160 - 32 = 128.\)
Since the discounted selling price = 128, the profit = 128-120 = 8.




Hi GMATGuruNY

Thanks for your great explanation :thumbup:

Can you please shed light about the meaning of mark price, mark up and mark down? What kind of relationship with revenue or price?


Thanks in advance
GMAT Club Bot
A shop purchased a pair of sunglasses for $120 and was &nbs [#permalink] 07 Jul 2018, 04:31

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