C.B. Clothing ordered sweaters at a wholesale cost of $20 each. The store marked up the price 50 percent above the wholesale cost to use as their selling price. After every month that the sweater didn’t sell, the store reduced the selling price by 20 percent. After how many monthly price reductions did the price dip below the wholesale cost?
Answer
A
after 1 monthly price reduction
B
after 2 monthly price reductions
C
after 3 monthly price reductions
D
after 4 monthly price reductions
Explanation
The initial selling price was $20 × 1.5 = $30. Each reduction leaves 80% of the previous price: after one reduction it is $24, and after two it is $19.20, which is below the $20 wholesale cost. So the price dipped below cost after 2 monthly price reductions.
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