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# Increase profit

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Manager
Joined: 04 Jan 2016
Posts: 166
Location: United States (NY)
GMAT 1: 620 Q44 V32
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22 Sep 2017, 18:33
Hello All GMAT experts,

GMATNinja, bb, Bunuel and all others.

I have a question:

How to increase profit while the sales price stays the same but the cost price goes down?

I have been experimenting with this idea for quit a while and still can not figure out a way to do it.
Maybe my brain is exhausted.
I also searched the GMAT club Quantitative Forum for a couple of night by now to find some, close, examples but have be unsuccessful.

I really need your help and examples if possible.

Respect
Mosa Rahimi
GMAT applicant from Afghanistan.
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Re: Increase profit  [#permalink]

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23 Sep 2017, 11:44
Hi Heseraj,

By definition, "profit" is the DIFFERENCE between the 'cost' of an item and the 'sell price' of the item. For example, if an item costs you \$10 and you sell it for \$12, then the profit is...

(Sell price) - (cost) = \$12 - \$10 = \$2 of profit

Since there are two 'pieces' to this equation, you can increase the profit on an item by EITHER raising the sell price OR lowering your initial cost.

In this example, if you increase the sell price to \$13, then you can increase the profit...

\$13 - \$10 = \$3 of profit

You could achieve the same level of profit if you could decrease the initial cost (if the initial cost was just \$9 instead of \$10)....

\$12 - \$9 = \$3 of profit

Beyond the sale of one item, you can also increase OVERALL profit by increasing the number of items sold (at a given profit margin).

GMAT assassins aren't born, they're made,
Rich
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# Rich Cohen

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Manager
Joined: 04 Jan 2016
Posts: 166
Location: United States (NY)
GMAT 1: 620 Q44 V32
GMAT 2: 600 Q48 V25
GMAT 3: 660 Q42 V39
GPA: 3.48

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23 Sep 2017, 18:51
Thank you very much for the response. It is very helpful.

However, i was searching within GMAT club to find examples such as the one below:

The sales price has a 10 percent over the cost price. However, after a 10 percent reduction in the cost price, the same sales price of (11/10x) would translate to 20 percent profit. Now if the reduced cost price is equal to 200, what is the sales price?

Can you kindly please provide me an example such as this from GMAT club questions forum, something that i failed to do during last two weeks, so i can digest the concept.
EMPOWERgmat Instructor
Status: GMAT Assassin/Co-Founder
Affiliations: EMPOWERgmat
Joined: 19 Dec 2014
Posts: 12411
Location: United States (CA)
GMAT 1: 800 Q51 V49
GRE 1: Q170 V170
Re: Increase profit  [#permalink]

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24 Sep 2017, 12:42
1
Hi Heseraj,

Assuming that you've transcribed this question correctly, there's something "off" about the math in this question. Here's why:

We're told that the sale price is 10% above the cost price. For example...

Cost price = \$100
Sale price = \$110

The prompt then tells us that there is a 10% drop in the cost price, so we now have....

Cost price = \$90
Sale price = \$110

However, at this point, that same Sale price is NOT 20% greater than the Cost price; it's 20/90 = 2/9 = 22.222222% greater than the cost price. This result occurs regardless of the numbers that you use. Thus, there's something wrong with the example that you're listing.

All of that having been said, this question is really just about Percentage Change (and you should be able to search for that concept).

GMAT assassins aren't born, they're made,
Rich
_________________

760+: Learn What GMAT Assassins Do to Score at the Highest Levels
Contact Rich at: Rich.C@empowergmat.com

# Rich Cohen

Co-Founder & GMAT Assassin

Special Offer: Save \$75 + GMAT Club Tests Free
Official GMAT Exam Packs + 70 Pt. Improvement Guarantee
www.empowergmat.com/

***********************Select EMPOWERgmat Courses now include ALL 6 Official GMAC CATs!***********************

Manager
Joined: 04 Jan 2016
Posts: 166
Location: United States (NY)
GMAT 1: 620 Q44 V32
GMAT 2: 600 Q48 V25
GMAT 3: 660 Q42 V39
GPA: 3.48
Re: Increase profit  [#permalink]

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24 Sep 2017, 14:44
Thank you very much Rich.
You are awesome. I wish i've purchased EmpowerGMAT in my early stages of GMAT journey.
Re: Increase profit &nbs [#permalink] 24 Sep 2017, 14:44
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# Increase profit

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