If the price of an article is decreased by 20% and then the new price is increased by 25%, then what is the…
If the price of an article is decreased by 20% and then the new price is increased by 25%, then what is the net change in the price?
0%
5% increase
5% decrease
Cannot be determined due to insufficient data
Solution
Let the initial price be 100. After a 20% decrease the price is $100 - 20 = 80$. After a 25% increase on 80 the price is $80 + 25\% \text{ of } 80 = 80 + 20 = 100$. The price returns to 100, so the net change is 0%.