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27 Feb 2026, 06:37
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Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
25%
(medium)
Question Stats:
84% (01:42) correct
16%
(02:08)
wrong
based on 37
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Not Attempted Yet
Six months ago, when the exchange rate was $1.20 per euro, a certain cruise cost $1,800 for customers paying in U.S. dollars. The price of the same cruise is now $3,000, and the exchange rate is $1.50 per euro. Which of the following is closest to the percent increase in the euro price of the cruise?
A. 25%
B. 33%
C. 40%
D. 42%
E. 50%
A. 25%
B. 33%
C. 40%
D. 42%
E. 50%
27 Feb 2026, 09:53
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The key concept here is percent change with unit conversion — the question asks for the percent increase in the euro price, not the dollar price. That one word — euro — is where most people lose a mark.
Step 1 — Convert the old dollar price to euros
Six months ago: $1.20 = 1 euro, so to convert dollars to euros, divide by 1.20.
Old euro price = $1,800 ÷ $1.20 per euro = 1,500 euros
Step 2 — Convert the new dollar price to euros
Now: $1.50 = 1 euro.
New euro price = $3,000 ÷ $1.50 per euro = 2,000 euros
Step 3 — Calculate the percent increase
Percent increase = (New − Old) / Old × 100
= (2,000 − 1,500) / 1,500 × 100
= 500 / 1,500 × 100
= 33.3%
Closest answer: B. 33%
---
Common trap: The dollar price went from $1,800 to $3,000, which is a 66.7% increase. If you skip the currency conversion and compute percent change in dollars instead of euros, you'll either get ~67% (not in the choices) or get confused and guess 50%. The GMAT built this trap deliberately — the exchange rate shift partially offsets the dollar price increase when viewed from the euro side.
Quick sanity check: The euro strengthened (from $1.20 to $1.50 per euro), meaning each euro buys more dollars now. So the euro price should rise less than the dollar price. 33% < 67% — that confirms we're on the right track.
Takeaway: On currency percent-change problems, always convert both prices into the same currency the question asks about before computing percent change — never work with mixed currencies.
(Kavya | 725 on GMAT Focus Edition)
Step 1 — Convert the old dollar price to euros
Six months ago: $1.20 = 1 euro, so to convert dollars to euros, divide by 1.20.
Old euro price = $1,800 ÷ $1.20 per euro = 1,500 euros
Step 2 — Convert the new dollar price to euros
Now: $1.50 = 1 euro.
New euro price = $3,000 ÷ $1.50 per euro = 2,000 euros
Step 3 — Calculate the percent increase
Percent increase = (New − Old) / Old × 100
= (2,000 − 1,500) / 1,500 × 100
= 500 / 1,500 × 100
= 33.3%
Closest answer: B. 33%
---
Common trap: The dollar price went from $1,800 to $3,000, which is a 66.7% increase. If you skip the currency conversion and compute percent change in dollars instead of euros, you'll either get ~67% (not in the choices) or get confused and guess 50%. The GMAT built this trap deliberately — the exchange rate shift partially offsets the dollar price increase when viewed from the euro side.
Quick sanity check: The euro strengthened (from $1.20 to $1.50 per euro), meaning each euro buys more dollars now. So the euro price should rise less than the dollar price. 33% < 67% — that confirms we're on the right track.
Takeaway: On currency percent-change problems, always convert both prices into the same currency the question asks about before computing percent change — never work with mixed currencies.
(Kavya | 725 on GMAT Focus Edition)
