According to analysts predictions, a tech startups profit

Question

According to analysts’ predictions, a tech startup’s profit per unit sold would increase by 1,500% and the number of units sold would increase by 400%. In fact, profit per unit increased by 900%, and the number of units sold increased by 500%. By what fraction was the startup’s actual total profit lower than the predicted total profit?

A. 1/8
B. 1/5
C. 1/4
D. 1/3
E. 2/5

Show Answer

Official Answer

C

A. 1/8
B. 1/5
C. 1/4
D. 1/3
E. 2/5

harjas2222 · Answer

Hi kevin

the meaning of "By what fraction was the startup’s actual total profit lower than the predicted total profit?"

means the Initial profit - Actual Profit? = ((10*16) * (100*5)) - ( (10*10) * (100*6) )
 = 80,000 - 60,000
 = 20,000?

where 20,000/ 80,000 is the correct approach?

shubh8 · Answer

Assume Profit/Unit = $1 (and only 1 unit is sold)

Predicted Profit = (1500/100)*(400/100)*1 = $60
Actual Profit = (900/100)*(500/100)*1= $45

By what fraction was the startup’s actual total profit lower than the predicted total profit- I solved this with a percent change formula:

(New-Old) / Old or (Actual Profit - Predicted Profit)/ Predicted Profit = (45-60)/60 = -1/4

Option C

luisdicampo · Answer

Deconstructing the Question

Total profit equals profit per unit times number of units.

We compare predicted profit and actual profit using growth factors.

Step-by-step

Let initial profit per unit be   P   and units be   Q  .

Predicted profit per unit increases by   1500\%  , so it becomes

16P

Units increase by   400\%  , so they become

5Q

Predicted total profit is

16P \cdot 5Q = 80PQ

Actual profit per unit increases by   900\%  , so it becomes

10P

Units increase by   500\%  , so they become

6Q

Actual total profit is

10P \cdot 6Q = 60PQ

Difference is

80PQ - 60PQ = 20PQ

Fraction lower than predicted is

\frac{20PQ}{80PQ} = \frac{1}{4}

Answer: C

MakB · Answer

Let the units sold be x and profit per unit be y.

If units increase by 400% --> 5x
Profit per unit would go up by 1500% --> 16y
Total profit = 16y x 5x = 80xy

But in actuality,
units increased was 500% --> 6x
Profit per unit increased by 900% --> 10y
total profit = 60xy

Difference of profit = 20xy
Now change in fraction 
20xy/80xy = 1/4

HarshavardhanR · Answer

Originally 
 Predicted Increase 
 Actual Increase 
 
  Profit/unit 
 p/u 
 16 (p/u) 
 10 (p/u) 
 
  Number of units 
 u 
 5u 
 6u 
 
  Profit 
 p 
 80p 
 60p

By what fraction was the startup’s actual total profit lower than the predicted total profit?

\frac{(80p - 60p) }{ 80p}  =  \frac{1}{4}

---
Harsha

According to analysts predictions, a tech startups profit

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	Originally	Predicted Increase	Actual Increase
Profit/unit	p/u	16 (p/u)	10 (p/u)
Number of units	u	5u	6u
Profit	p	80p	60p

GMAT Problem Solving (PS) Questions

According to analysts predictions, a tech startups profit

Prep Toolkit

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My Rewards