The price of an article is first increased by 40% and then decreased by 45%, due to reduction in sales. Find the net percentage change in the final price of the article.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. −23%.
Let the initial price of the article = P
the price is increased by 40%,
New price after increase = P + 40% of P = P × (1 + P/100) = P × 1.40
the price is decreased by 45%.
New price after decrease = 1.40P − 45% of 1.40P = 1.40P × (1 - 45/100)
⇒ 1.40P × 0.55 = 0.77P
The final price = 0.77P,
and the original price was P
The net change = 0.77P − P = −0.23P
Net percentage change = -0.23P/P × 100 = −23%