Q. If the price of an article is decreased by 20% and then the new price is increased by 25%, then what is the net change in the price?
(a) 0%
(b) 5% increase
(c) 5% decrease
(d) Cannot be determined due to insufficient data
Correct Answer: (a) 0%
Question from UPSC Prelims 2021 CSAT Paper
Explanation :
Article Price Change Calculation
Let’s say the original price of the article is P. If the price is decreased by 20%, then the new price would be P – 0.2P = 0.8P.
Now if this new price is increased by 25%, then the final price would be 0.8P + 0.25(0.8P) = 1P.
So the final price is equal to the original price P, which means there has been a net change of 0% in the price.
Therefore option (a) “0%” is the correct answer.
