Katie imports brown English teapots for a local Curiosity Shop. They cost her a certain amount , and her profit, when she sells them in the shop, is of this amount. Her mother has just found a new and cheaper source of teapots. They will now cost Katie percent less. Does she lower her price in the shop? Never! She maintains the same price and her profit now turns out to be percent. What was her original profit ?
. (Thanks, Mom)
Solution
If is the original cost to Katie, then is her profit, which is also what Curiosity Shop must mark-up Katie's price in order that she obtain this profit. Thus the selling price in the Curiosity Shop is
The new cost to Katie is , and her new profit is . The new selling price is
But the new and old prices are the same. So,
or
and cancels! We find that
The original profit was (b) percent.