## A Shopkeeper First Increased The Price Of An Article By 25 And Then By 20 What Is The Total Percent Increased

# A Shopkeeper First Increased The Price Of An Article By 25 And Then By 20 What Is The Total Percent Increased

In the realm of retail, understanding how price changes affect the overall cost is crucial. Let’s explore a scenario where a shopkeeper increases the price of an article not once, but twice, and delve into how these increments stack up to determine the total percentage increase.

## Understanding the two price increases:

### First price increase by 25%:

When the shopkeeper initially raises the price by 25%, it means the new price is 125% of the original price. This can be calculated by adding 25% of the original price to the original price.

### Second price increase by 20%:

Following the first increase, the shopkeeper decides to further hike the price by 20%. This brings the new price to 120% of the previously increased price.

## Calculating the total percentage increase:

### Method 1: Calculating step by step:

**Step 1**: Calculate the first price increase: 25% of the original price.**Step 2**: Add the first increase to the original price to get the first increased price.**Step 3**: Calculate the second price increase: 20% of the first increased price.**Step 4**: Add the second increase to the first increased price to find the final price.

### Method 2: Shortcut formula:

To calculate the total percentage increase when multiple price increases are applied successively, we use the formula:

(a+b+ab/100)

Where $a$ and $b$ are the percentages of increase, and $ab/100$ represents the compounded increase.

## Conclusion:

Understanding how multiple price increases affect the overall cost is essential for both consumers and retailers. By following the steps outlined above, one can accurately determine the total percentage increase after successive price hikes.

## FAQs:

### 1. How do I calculate the total percentage increase if there are more than two price increments?

- You can follow the same principles outlined here, applying them iteratively for each subsequent increase.

### 2. Can I use the shortcut formula for any number of price increases?

- Yes, the shortcut formula works regardless of the number of price increases, making it convenient for calculating compounded percentages.

### 3. Why is it important for shopkeepers to understand the concept of compounded price increases?

- Understanding compounded increases helps shopkeepers make informed decisions about pricing strategies and ensures transparency with customers.

### 4. Is there a limit to how many times a shopkeeper can increase the price of an article?

- While there may not be a strict limit, excessive price increases can alienate customers and harm the reputation of the business.

### 5. How can consumers protect themselves from unfair price hikes?

- Consumers can stay informed about market prices, compare prices across different retailers, and voice concerns about unjustified price increases to regulatory authorities when necessary.