A shop purchases items and sells them by adding 40% to the purchase price. When the shop offers a discount of $50 on each item, it earns a profit of $300 per item. What is the selling price?
Answer Choices
Correct answer marked belowSee the full step-by-step explanation
You can see the correct answer above. Sign in for free to unlock the complete worked solution.
Track your performance and improve
Get detailed analytics, unlock full explanations, and move up difficulty tiers as you practice.
Unlock the full explanation
Create a free account to reveal the correct answer, see the step-by-step explanation, and start tracking your GMAT progress.
Wait, I'm getting confused with the wording. Does the $50 discount come off the marked price (the 140%)? I set it up as 1.4x - 50 = x + 300 but not sure if that's right.
Yeah that's the way I read it too. Discount applies to the selling price they set, not the original cost.
Same setup here. Just solve for x first then multiply by 1.4.
Got $1225 but want to double check. If profit is 300 after the discount, then pre-discount profit was 350, which is 40% of cost. So 350 = 0.4x gives x = 875. Then selling price = 875 * 1.4 = 1225. This way avoids the algebra mess.
Oh nice, working backwards from the profit is way cleaner than my equation.
This one felt pretty fair for 555-605. The discount wording is the only trap — once you realize the $50 comes off the marked-up price it's straightforward.
Agreed, I overcomplicated it at first and started doing algebra with two variables lol.
What it tests
Your ability to compute percentage change, percentage of a whole, and to work backwards from a final value.
Common trap
Treating successive percentage changes as additive — a 10% rise then a 10% fall is not back to the start.