Question

The owner of an office supply store initially spent $400 to bring in a new line of pants that he wants to sell. He buys a pack of 10 pens for three dollars and sells each pack for five dollars. He plugged one line to represent his cost and another to represent his income. Which statement about the situation is true?

1) The owner made a profit of $20.
2) The owner made a profit of $30.
3) The owner made a profit of $40.
4) The owner made a profit of $50.

Answer 1

To cover the initial investment of $400, the owner needs to sell 200 packs of pens at a profit of $2 per pack. The given statements regarding the owner's profit do not account for the initial investment and are incorrect when considered in isolation.

Step-by-step explanation:

To determine the owner's profit from selling the new line of pens, we need to calculate both the total revenue and total cost. The owner buys a pack of 10 pens for three dollars and sells each pack for five dollars. To calculate the profit per pack, we subtract the cost price from the selling price: $5 - $3 = $2 profit per pack.

Now, we need to find out how many packs the owner must sell to cover the initial investment of $400. Since the profit per pack is $2, dividing the initial investment by the profit per pack gives us the number of packs needed to break even: $400 / $2 = 200 packs.

Finally, we verify the statements provided to find out which one correctly depicts the owner's profit:

1. The owner made a profit of $20.
2. The owner made a profit of $30.
3. The owner made a profit of $40.
4. The owner made a profit of $50.

None of the given statements are correct when considering just the profit per pack; they ignore the initial investment.