Question

Margo purchases bulk teas from a warehouse and marks up those prices by 20% for retail sale. When teas go unsold for more that two months, Margo marks down the retail price by 20%. She says that she is breaking even, that is, she is getting the same proce for the tea that she paid for it. Is she correct? Explain.

Answer 1

yes she is that is correct it is true because she raised it by 20 then decreased it by 20 so yes she made back her spent money

Answer 2

No, it's not correct

Explanation:

Let's suppose the initial price by which she purchases is P. if she marks up the price by 20%, retail price (RP) is 1.2*P

If then, she marks down the price by 20%, it's the same than multiplying it by 0.8. So the promotion price (PP) would be:

`PP=0.8*1.2*P=0.96*P`

0.96*P is less than P, the initial price by which she bought it, not the same price.