A cereal company reduces a package from \(24\,\text{oz}\) to \(20\,\text{oz}\) but keeps the price at \(\$4.50\).
A consumer advocate says, “That is a hidden price increase of \(20\%\).”
The company replies, “We reduced the amount by less than \(17\%\).”
Determine whether both statements are mathematically correct. Find the percent decrease in package size and the percent increase in price per \(4\,\text{oz}\).
Hints
- Use the original package size as the base for the size decrease.
- Find the old and new prices for the same \(4\,\text{oz}\) amount.
- Compare the unit-price increase with the old unit price.
Solution
1. The package size decreased by \(24 - 20 = 4\,\text{oz}\). Relative to the original size, \(\frac{4}{24} = \frac{1}{6} \approx 16.67\%\). Therefore, the company's statement is correct.
2. The old price per \(4\,\text{oz}\) was \(\$4.50 \div 6 = \$0.75\).
3. The new price per \(4\,\text{oz}\) is \(\$4.50 \div 5 = \$0.90\).
4. The unit price increased by \(\$0.90 - \$0.75 = \$0.15\). Relative to the old unit price, \(\frac{0.15}{0.75} = 0.20 = 20\%\). Therefore, the consumer advocate's statement is also correct.
Answer
Both statements are correct. The package size decreased by approximately \(16.67\%\), while the price per \(4\,\text{oz}\) increased by \(20\%\).