The wholesale cost of a hair dryer is $20. The original markup was 46% based on selling price....

Question:

The wholesale cost of a hair dryer is $20. The original markup was 46% based on selling price. Find the final sale price after the following series of price changes:

A. a markup of 32%

B. a markup of 19%

C. a markdown of 49%

D. a markdown of 12%

Markup:

In economics, a markup is difference between the sale price of a good and the cost of the good. Markup is usually expressed as a percentage of the cost.

Answer and Explanation:

We first compute the current price:

  • price = cost *(1 + markup)
  • price = 20 *(1 + 46%)
  • price = 29.2

When there is a markup, the price increases. When there is a markdown, the price decreases. Thus, the price after the adjustments is:

  • 29.2 *(1 + 32%)*(1 + 19%)*(1 - 49%)*(1 - 12%) = 20.59

That is, the final price is $20.59.


Learn more about this topic:

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How to Calculate Markup: Definition & Formula

from Principles of Marketing: Help and Review

Chapter 12 / Lesson 22
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