Question

A certain company increased its prices by 30 % during 2003. Then, in 2004, it was

forced to cut back its prices by 20 %. What was the net change in price?

Answer 1

Index:

p=original price

(130/100)=30% increase in price

(80/100)=20% decrease in price

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2003: (130/100)*p

2004: (130/100)*p*(80/100)

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Net change in price:

(130/100)*p*(80/100)-p

=p((130/100)*(80/100)-1)

=p*(1/25)