Question

What sentence about markdowns and markups is true? (Please provide an explanation for your selected answer choice, this way I'm more clear on the concept.)

A) Markdowns and markups have no limit.
B) A markdown has no limit, but a markup is limited to 100% or less.
C) A markup has no limit, but a markdown is limited to 100% or less.
D) Markdowns and markups are limited to 100% or less.

Answer 1

Markdowns and markups are terms used for describing price change with reference to the original price.

Markdown refers to a price reduction and is shown as a % reduction of the original price; e.g. a 90% markdown means a $100 dress is now $10. Obviously it cant be more than 100% as it would then be FREE :)

Markup on the other hand refers to a price increase; also shown as a %. But there is no limit on how much higher you can go.

so right ans is C) A markup has no limit, but a markdown is limited to 100% or less.

Answer 2

C) A markup has no limit, but a markdown is limited to 100% or less.

[ It is because, markup is the amount added to the cost price of goods to cover overheads and profit so it could be anything, and has no limit then, markdown means is reduction in price which acts like "discount" which can't be more than 100% (It's own price)

Hope this helps!