If the price of an item is first increased by 10 per cent and then decreased by 10 per cent, the net effect is
Correct answer: B. a 1 per cent decrease
- A. no change
- B. a 1 per cent decrease
- C. a 1 per cent increase
- D. a 10 per cent decrease
Explanation
Starting at 100, a 10 per cent rise gives 110, and a 10 per cent fall on 110 removes 11, leaving 99, so the net change is a loss of 1 per cent. The decrease is larger in absolute terms because it is calculated on a larger base. Successive percentage changes never simply cancel.
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