My Math Forum  

Go Back   My Math Forum > High School Math Forum > Algebra

Algebra Pre-Algebra and Basic Algebra Math Forum


Thanks Tree2Thanks
  • 1 Post By JeffM1
  • 1 Post By JeffM1
Reply
 
LinkBack Thread Tools Display Modes
January 1st, 2018, 11:09 AM   #1
Member
 
Joined: Nov 2016
From: USA

Posts: 33
Thanks: 1

Percent Change discrepancy

I'm trying to reconcile why these two percent changes aren't agreeing in the end:

An artist makes a deal with a sales broker to market and sell a sculpture. The artist agrees to pay a 25% commission charge on the sales price of the sculpture. The gallery where the sculpture is displayed requires a non-negotiable 10% fee from the sales price (which will be paid by the artist, not the broker).

The artist's sculpture sells for 10,000 dollars. From the 10,000 dollar sale, the gallery receives its 10% fee (1000 dollars). The broker is owed 25% of the sale, which is 2500 dollars. That leaves 6500 left for the artist.

Wanting more business from the artist, the broker reduces the commission from 25% down to 20% on this sculpture sale (a $2000 commission). The gallery still receives its 10% fee (1000 dollars), so the artist ultimately received 7000 dollar net payment.

The artist went from 6500 to 7000. The percent change calculation is:
(7000 - 6500) / 6500 = 7.69% increase.

Since the commission had been lowered 5.00%, why didn't this result in a 5.00% increase for the artist?
Seventy7 is offline  
 
January 1st, 2018, 11:23 AM   #2
Senior Member
 
Joined: May 2016
From: USA

Posts: 1,038
Thanks: 423

Quote:
Originally Posted by Seventy7 View Post
I'm trying to reconcile why these two percent changes aren't agreeing in the end:

An artist makes a deal with a sales broker to market and sell a sculpture. The artist agrees to pay a 25% commission charge on the sales price of the sculpture. The gallery where the sculpture is displayed requires a non-negotiable 10% fee from the sales price (which will be paid by the artist, not the broker).

The artist's sculpture sells for 10,000 dollars. From the 10,000 dollar sale, the gallery receives its 10% fee (1000 dollars). The broker is owed 25% of the sale, which is 2500 dollars. That leaves 6500 left for the artist.

Wanting more business from the artist, the broker reduces the commission from 25% down to 20% on this sculpture sale (a $2000 commission). The gallery still receives its 10% fee (1000 dollars), so the artist ultimately received 7000 dollar net payment.

The artist went from 6500 to 7000. The percent change calculation is:
(7000 - 6500) / 6500 = 7.69% increase.

Since the commission had been lowered 5.00%, why didn't this result in a 5.00% increase for the artist?
Because the increase you are calculating is based on the artist's receipt rather than the sales price.

$0.05 * 10000 = 500.00$

$0.0769 * 6500 = 499.85 \approx 500.00.$
Thanks from Seventy7
JeffM1 is offline  
January 1st, 2018, 01:23 PM   #3
Member
 
Joined: Nov 2016
From: USA

Posts: 33
Thanks: 1

Quote:
Originally Posted by JeffM1 View Post
Because the increase you are calculating is based on the artist's receipt rather than the sales price.

$0.05 * 10000 = 500.00$

$0.0769 * 6500 = 499.85 \approx 500.00.$
Is it correct for the artist to think that an extra 7.69% (approx.) arose when the broker lowered the commission rate?

Or did this deal simply result in 5.00% increase?
Seventy7 is offline  
January 1st, 2018, 04:27 PM   #4
Senior Member
 
Joined: May 2016
From: USA

Posts: 1,038
Thanks: 423

When the broker lowered the commission rate by 5% of the gross price, the artist's net receipts rose about 7.69%. It is looking at the same thing from two different vantage points.
Thanks from Seventy7
JeffM1 is offline  
January 2nd, 2018, 03:40 AM   #5
Global Moderator
 
Joined: Dec 2006

Posts: 19,057
Thanks: 1618

The broker's commission went from \$2500 to \$2000. The percent change calculation is:
((2500 - 2000)/2500 = 20% decrease.

Why didn't this result in a 5% increase for the artist?
skipjack is offline  
January 2nd, 2018, 05:57 AM   #6
Math Team
 
Joined: Oct 2011
From: Ottawa Ontario, Canada

Posts: 12,607
Thanks: 845

You can "complicate!" your problem more by kicking out
the gallery and using 9000 as selling price.
Then the 2500 fee becomes ~27.8% of 9000,
and the reduced 2000 fee becomes ~22.2% of 9000.
Ahem!
Denis is online now  
Reply

  My Math Forum > High School Math Forum > Algebra

Tags
change, discrepancy, percent



Thread Tools
Display Modes


Similar Threads
Thread Thread Starter Forum Replies Last Post
Percent Change Scully Elementary Math 2 February 12th, 2016 01:27 AM
Percent Change Scully Elementary Math 4 July 31st, 2015 10:49 AM
Geometry percent change Rfeynman16 Geometry 10 January 2nd, 2014 08:13 PM
Percent Change Question moreyS Algebra 3 February 12th, 2012 07:31 PM
Help? Percent of Change! Verridith Elementary Math 3 November 29th, 2007 04:07 AM





Copyright © 2018 My Math Forum. All rights reserved.