Question:A store owner increases the price of an item from $40 to $50. The increase in price is what percentage...
GMAT Problem-Solving and Data Analysis : (PS_DA) Questions
Question:
A store owner increases the price of an item from \(\$40\) to \(\$50\). The increase in price is what percentage of the original price?
Answer Choices:
- \(12.5\%\)
- \(20\%\)
- \(25\%\)
- \(80\%\)
1. TRANSLATE the problem information
- Given information:
- Original price: \(\$40\)
- New price: \(\$50\)
- What we need to find: The increase as a percentage of the original price
2. INFER what calculation is needed first
- We need the actual dollar amount of the increase
- Price increase = New price - Original price = \(\$50 - \$40 = \$10\)
3. TRANSLATE the key phrase into math
- "What percentage of the original price" means:
- The increase (\(\$10\)) is the "part"
- The original price (\(\$40\)) is the "whole"
- This gives us the setup: \(\frac{\mathrm{Increase}}{\mathrm{Original\ Price}} \times 100\%\)
4. SIMPLIFY the calculation
- Substitute values: \(\frac{\$10}{\$40} \times 100\%\)
- Simplify the fraction: \(\frac{\$10}{\$40} = \frac{1}{4}\)
- Convert to percentage: \(\frac{1}{4} \times 100\% = 25\%\)
Answer: (C) 25%
Why Students Usually Falter on This Problem
Most Common Error Path:
Weak INFER skill: Students misinterpret "percentage of the original price" and use the new price (\(\$50\)) as the denominator instead of the original price (\(\$40\)).
Their calculation becomes: \(\frac{\$10}{\$50} \times 100\% = 20\%\)
This leads them to select Choice (B) (20%)
Second Most Common Error:
Poor TRANSLATE reasoning: Students calculate the new price as a percentage of the original price instead of just the increase.
They compute: \(\frac{\$50}{\$40} \times 100\% = 125\%\), then get confused about what this means in the context of the answer choices. This leads to confusion and guessing.
The Bottom Line:
The critical insight is recognizing that "percentage of the original price" specifically refers to using the original price as the base (denominator) for the percentage calculation, not the new price.