A shop owner offers the following discount options on an article to a customer: 1. Successive discounts of…
A shop owner offers the following discount options on an article to a customer:
1. Successive discounts of 10% and 20%, and then pay a service tax of 10%
2. Successive discounts of 20% and 10%, and then pay a service tax of 10%
3. Pay a service tax of 10% first, then successive discounts of 20% and 10%
Which one of the following is correct?
1 only is the best option for the customer.
2 only is the best option for the customer.
3 only is the best option for the customer.
All the options are equally good for the customer.
Solution
Multiplication is commutative. In each option the final amount is the marked price multiplied by the factors $0.90$, $0.80$ and $1.10$ in some order. Since the order of multiplication does not change the product, all three options yield the same final price: $MP \times 0.90 \times 0.80 \times 1.10$. Hence all options are equally good for the customer.