MGMAT CAT1 - rounded to the nearest percent question

This topic has expert replies
Junior | Next Rank: 30 Posts
Posts: 22
Joined: Wed May 30, 2007 1:14 pm
Hi,
Can you please help me to understand the below question's explanation particularly, 'rounded to the nearest percent' words?

The statement (1) below states the regular price is 60% of MSRP $2000 rounded to the nearest percent. When solving the question, I thought 60% of $2000 is $1200 and as 60% does not have any decimals, it is already rounded to the nearest percent.

But MGMAT explanation states that 'rounded to the nearest percent' means plus or minus 0.5% of the MSRP. If 60% is already rounded, why will you think it is plus or minus 0.5% of MSRP?

Thanks for your help,
JP

Question:
All of the furniture for sale at Al’s Discount Furniture is offered for less than the manufacturer’s suggested retail price (MSRP). Once a year, Al’s holds a clearance sale. If Jamie purchased a certain desk during the sale, did she get a discount of more than 50% of Al’s regular price for the desk?

(1) Al’s regular price for the desk is 60%, rounded to the nearest percent, of the MSRP of $2000.
(2) The sale price was $601 less than Al’s regular price for the desk.

Explanation:
In order to determine the percent discount received by Jamie, we need to know two things: the regular price of the desk and the sale price of the desk. Alternatively, we could calculate the percent discount from the price reduction and either the regular price or the sale price.

(1) INSUFFICIENT: This statement tells us the regular price of the desk at Al’s, but provides no information about how much Jamie actually paid for the desk during the annual sale.

(2) INSUFFICIENT: This statement tells us how much the price of the desk was reduced during the sale, but provides no information about the regular price. For example, if the regular price was $6010, then the discount was only 10%. On the other hand, if the regular price was $602, then the discount was nearly 100%.

(1) AND (2) INSUFFICIENT: At first glance, it seems that the statements together provide enough information. Statement (1) seems to provide the regular price of the desk, while statement (2) provides the discount in dollars.

However, pay attention to the words “rounded to the nearest percent” in statement (1). This indicates that the regular price of the desk at Al’s is 60% of the MSRP, plus or minus 0.5% of the MSRP. Rather than clearly stating that the regular price is (0.60)($2000) = $1200, this statement gives a range of values for the regular price: $1200 plus or minus $10 (0.5% of 2000), or between $1190 and $1210.

If the regular price was $1190, then the discount was ($601/$1190) × 100% = 50.5% (you can actually see that this is greater than 50% without calculating).

If the regular price was $1210, then the discount was ($601/$1210) × 100% = 49.7% (you can actually see that this is less than 50% without calculating).

The uncertainty about the regular price means that we cannot answer with certainty whether the discount was more than 50% of the regular price.

The correct answer is E.

Master | Next Rank: 500 Posts
Posts: 214
Joined: Fri Jul 20, 2007 1:35 am
Thanked: 3 times

by beny » Mon Aug 13, 2007 2:51 am
Yes, the 60% is rounded. Therefore, the 60% is not the actual price he paid. He actually paid a price discounted between 59.5% and 60.4% (and the discount was rounded off). I don't think you'd get this kind of question on the actual GMAT. When I was taking MGMAT's test, this unusual wording immedietly popped out to me, so I knew it was a trick question.

Junior | Next Rank: 30 Posts
Posts: 22
Joined: Wed May 30, 2007 1:14 pm

by JP » Mon Aug 13, 2007 5:43 am
Thanks Beny.

I did not understand the wording earlier. I thought rounding is not an issue as 60 is the original percent and no need to round it as it does not have a decimal. Now after your explanation, I realize that the original number may not be 60.