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Based on this year's costs, an orcharde grower budgets P dollars for planing N new trees next year. If the average cost of planting each tree were to increase 25% from this year's cost, then the greatest number of trees that the orchard grower could plant next year using P dollars would be
A) 20% less than N
B) 25% less than N
C) equal to N
D) 20% greater than N
E) 25% greater than N
If it’s on budget, then the cost per tree is P/N. Since the average cost were to increased by 25%, the cost per tree will the be 1.25(P/N) = 1.25P/N. Therefore, the number of trees that can be planted is:
P/(1.25P/N) = PN/(1.25P) = N/1.25 = 4N/5 = (80/100)N
We see that only 80% of the trees can be planted with P dollars, which is a 20% decrease from the original number of trees.
Alternate Solution:
Let’s assume that the grower budgets $100 this year for planting N = 100 trees. Thus, it will cost $1 per tree for planting. Next year, a 25% increase raises the cost per tree to $1.25. With the budget still at $100, it means that the grower can plant only 100/1.25 = 80 trees, which is 20% less than what he can plant this year.
Answer: A