The operating cost per passenger is $100, while other expenses amount to $25 per passenger. The operator earns a profit of 20% on the total cost. If the operating cost decreases by 10% while the fare remains unchanged, what will be the new profit per passenger?
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Wait, I got $35 the first time — did I mess up the base? The stem says profit is 20% of total cost, not the fare.
Same here. I think you have to add both costs before applying the 20%.
Oh, that's where I went wrong. Thanks!
This one took me a minute because I kept treating the 20% as markup on the operating cost only. Once I combined $100 and $25, it clicked.
Yep, the wording "total cost" is doing a lot of work here.
Is the 10% decrease applied to the $100 only, or to the combined $125? I assumed only the operating cost since other expenses usually stay fixed.
Got 37.5 but wasn't confident. The trap answer is definitely tempting if you forget the other expenses stay the same.
Right, and the fare doesn't change, so the profit shift is just the saved cost.
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.