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A firm increases its revenues by 10% between 2008 and 2009. The firm’s 14 Sep 2015, 22:49
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67% (02:03) correct 33% (02:13) wrong based on 184 sessions

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A firm increases its revenues by 10% between 2008 and 2009. The firm’s costs increase by 8% during this same time. What is the firm’s percent increase in profits over this period, if profits are defined as revenues minus costs?

(1) The firm’s initial profit is $200,000.
(2) The firm’s initial revenues are 1.5 times its initial costs.


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B
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A firm increases its revenues by 10% between 2008 and 2009. The firm’s 15 Sep 2015, 03:46
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Let revenue = r & cost = c and amount of increase = x
From statement 1:
Initial Profit = r-c = 200000
(1.1*r) - (1.08*c) = 200000 (1+x) → value of x can not be determined; Insufficient
From statement 2:
r = 1.5c
Initial Profit = 1.5c - c = p → .5c = p,
Increased Profit (1.1)(1.5)c - (1.08)c = (1+x)p → .57c = (1+x)p → .57c = (1+x)*.5c → .57 = (1+x)*.5 → value of x can be determined; Sufficient
Answer: B
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A firm increases its revenues by 10% between 2008 and 2009. The firm’s 15 Sep 2015, 05:05
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A firm increases its revenues by 10% between 2008 and 2009. The firm’s costs increase by 8% during this same time. What is the firm’s percent increase in profits over this period, if profits are defined as revenues minus costs?

(1) The firm’s initial profit is $200,000.
(2) The firm’s initial revenues are 1.5 times its initial costs.


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Profit = Revenues - Costs

Let, Initial Cost = c
Initial revenue = r
i.e. Initial Profits = r-c

Let, Later Cost = c+(8/100)c = 1.08c
Initial revenue = r+(10/100)c = 1.10r
i.e. Initial Profits = 1.10r - 1.08c

Question : % Increase in Profiles = [(0.1r - 0.08c)*100/(r - c)] = ?

Statement 1: r - c = $200,000

Since we have two variable with different coefficient so the asked expression can't be solved. Hence,
NOT SUFFICIENT

Statement 2: r - c = 1.5c
i.e. r = 2.5c
By Substituting the value of r in terms of c, we can solve the value of expression [(0.1r - 0.08c)*100/(r - c)]. Hence,
SUFFICIENT

Answer: option B
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A firm increases its revenues by 10% between 2008 and 2009. The firm’s 15 Sep 2015, 12:38
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Initial Cost (2008) --> C
Initial Revenue (2008) --> R

Profit in 2008 --> R - C

Cost in 2009 --> (8%)*(C) + C = 1.08*C
Revenue in 2009 --> (10%)* (R) + R = 1.1*R

Profit in 2009 --> (1.1* R ) - (1.08 *C)

Increase in Profit = (Change in profit/initial profit)
x = (0.1*R - 0.08*C) / R - C ----------------- (1)

statement 1 : R- C = $200,000


(1) becomes
x = (0.1*R - 0.08*C) / $200,000

Cannot determine x ... statement 1 insufficient.

statement 2 : R = 1.5*C

(1) becomes
x = (0.1*(1.5 C) - 0.08*C) / (1.5C - C)

This equation can be easily solved to find out x...
statement 2 sufficient - Answer B
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A firm increases its revenues by 10% between 2008 and 2009. The firm’s 17 Sep 2015, 09:10
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Forget conventional ways of solving math questions. In DS, Variable approach is the easiest and quickest way to find the answer without actually solving the problem.
Remember equal number of variables and independent equations ensures a solution.

A firm increases its revenues by 10% between 2008 and 2009. The firm’s costs increase by 8% during this same time. What is the firm’s percent increase in profits over this period, if profits are defined as revenues minus costs?

(1) The firm’s initial profit is $200,000.
(2) The firm’s initial revenues are 1.5 times its initial costs.

Transforming the original condition and the question, we get the below.

Attachment:
1-st explain.jpg
1-st explain.jpg [ 1.9 MiB | Viewed 3256 times ]
Attachment:
2-nd explain.jpg
2-nd explain.jpg [ 1.88 MiB | Viewed 3237 times ]
Attachment:
3-rd explain.jpg
3-rd explain.jpg [ 1.9 MiB | Viewed 3252 times ]

Then we can find the relationship between r and c. in case of 2), r=1.5c. Therefore, B is the answer.

p.s 1) Transforming the original condition and the question, following variable approach method 1, we can solve approximately 30% of DS questions.
p.s 2) from con 1) and con 2), if one of the condition is given by numbers and the other is given by ratio (percent,fraction), then the condition with ratio(percent,fraction) has higher chance of being the answer.
This question is a good example, with the answer being B.
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A firm increases its revenues by 10% between 2008 and 2009. The firm’s 15 Dec 2022, 04:37
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