Hi Reed, Thank you for the great lesson, In the last question can we consider that the company may have loss or should we only consider that it is having profit as the question is asking about profit changes?
The answer would be 'E.' A 5% increase of cost and a 10% increase of revenue have an unknown effect on % increase in profit, because we do not know the original relationship between costs and revenue. Were original costs 10% of original revenue? Were they 99.9% of original revenue? That will result in vastly different input on the percent change in profit: (test a case to see, this can help clarify abstract logic like this): Original revenue: 100 Original costs: 99.99 Original profit: .01 New revenue: 110 New costs: ~105 New Profit: ~5 A .01 to 5 increase is a HUGE percentage increase (it's a 1:500 ratio, which would be a 49,900% increase) Original revenue: 100 Original costs: 20 Old profit: 80 New Revenue: 110 New Costs: 21 New profit: 89 80 to 89 is slightly more than a 10% increase. Which isn't the same as a 49,900% increase.
Hi Reed thanks for the lesson. One question: I know that you specified at the beginning of the video that the questions were referring to "positive profit" but technically if I assume, for example in the last question that costs could have been greater or smaller than revenue I should choose answer E, correct?
I'm a little reluctant to answer, since I've never seen negative profit on the GMAT, or, for that matter, '% change' of a negative number... Like what IS a 10% increase of (-60)? -54? Well... But 1% of -60 would be -(.6), so 10% increase would be + (-6)... an increase of -6... would actually be a decrease of 6? Right? So a 10% increase of -60 would be... -66?... But... it's an increase, it can't be... less... I don't... I don't know... I honestly don't know convention for percents of negative numbers and in 8 years of GMAT teaching have never had to think about it as much as I did to write this comment. Profit implies revenues are more than costs. Otherwise the GMAT will call it 'loss.'
hey reed in 2 nd question what i did is the cost i.e is 6 i calculated the 15% of it which is 0.9$ and then subtract it from 4$ which was the profit is it correct ?
Q1 SP=> 90% of 130% of CP=> 117% of CP 1% of SP=> 120/30= $ 4 MP= 130% of CP or 1.3 times CP MP=> 130*4= 520 So, SP=> 0.9*1.3=1.17 times of CP Net profit=> 17% of CP that is 17*4=> 68
You're the best! I love these classes
Hi Reed, Thank you for the great lesson, In the last question can we consider that the company may have loss or should we only consider that it is having profit as the question is asking about profit changes?
dear reed, thank you for the video. So I did not get, what is the solution for the problem at minute 54?
The answer would be 'E.' A 5% increase of cost and a 10% increase of revenue have an unknown effect on % increase in profit, because we do not know the original relationship between costs and revenue. Were original costs 10% of original revenue? Were they 99.9% of original revenue? That will result in vastly different input on the percent change in profit:
(test a case to see, this can help clarify abstract logic like this):
Original revenue: 100
Original costs: 99.99
Original profit: .01
New revenue: 110
New costs: ~105
New Profit: ~5
A .01 to 5 increase is a HUGE percentage increase (it's a 1:500 ratio, which would be a 49,900% increase)
Original revenue: 100
Original costs: 20
Old profit: 80
New Revenue: 110
New Costs: 21
New profit: 89
80 to 89 is slightly more than a 10% increase. Which isn't the same as a 49,900% increase.
Awesome!
Hi Reed thanks for the lesson. One question: I know that you specified at the beginning of the video that the questions were referring to "positive profit" but technically if I assume, for example in the last question that costs could have been greater or smaller than revenue I should choose answer E, correct?
I'm a little reluctant to answer, since I've never seen negative profit on the GMAT, or, for that matter, '% change' of a negative number... Like what IS a 10% increase of (-60)? -54? Well... But 1% of -60 would be -(.6), so 10% increase would be + (-6)... an increase of -6... would actually be a decrease of 6? Right? So a 10% increase of -60 would be... -66?... But... it's an increase, it can't be... less... I don't...
I don't know... I honestly don't know convention for percents of negative numbers and in 8 years of GMAT teaching have never had to think about it as much as I did to write this comment.
Profit implies revenues are more than costs. Otherwise the GMAT will call it 'loss.'
@@reedarnold5468 That's fair, thanks for the answer. I will keep that in mind and treat profit considering always revenue > cost.
Robert dinero teaching quants great
hey reed in 2 nd question what i did is the cost i.e is 6 i calculated the 15% of it which is 0.9$ and then subtract it from 4$ which was the profit is it correct ?
That seems right to me.
Q1
SP=> 90% of 130% of CP=> 117% of CP
1% of SP=> 120/30= $ 4
MP= 130% of CP or 1.3 times CP
MP=> 130*4= 520
So, SP=> 0.9*1.3=1.17 times of CP
Net profit=> 17% of CP that is 17*4=> 68