Question

The percent change in profit from 2007 to 2008 is approximately what percent greater than the percent change in profit from 2008 to 2009?

 

• A. 500%
• B. 6%
• C. 1,500%
• D. 1,600%
• E. 1,700%

Hint:

When a data interpretation question seems nonsensical or leads to answers not in the options, re-read it carefully for subtleties. If it remains unclear, consider the possibility of typos in the question's text (e.g., wrong years) and look for a logical re-interpretation that uses the data to arrive at one of the answers.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
This question asks us to compare two different "percent changes" in profit. The question is unusually phrased, especially because one of the profit values is negative, which can make the definition of "percent change" ambiguous. We must first calculate the profits for the relevant years and then interpret the question in a way that leads to one of the given options. The formula for profit is Profit = Revenue - Expenses.
Step 2: Key Formula or Approach:
1. Read the Revenue (R) and Expenses (E) from the graph for 2007, 2008, and 2009 to calculate profits.
2. Calculate the monetary change in profit for the two periods: 2007 to 2008 and 2008 to 2009.
3. Given the ambiguity and the large percentages in the options, the question is likely flawed. A plausible interpretation is that it's not comparing the stated periods. Let's test a hypothesis: the question intends to compare the absolute monetary change from 2007-2008 with another period where the change was small. Let's find a period with a change of $1M.
- Profit 2005 = Revenue(24) - Expenses(21) = $3M.
- Profit 2006 = Revenue(26) - Expenses(24) = $2M.
The change from 2005 to 2006 is $2M - $3M = -$1M. The absolute change is $1M.
4. Let's assume the question meant to compare the absolute change from 2007-2008 (Value A) with the absolute change from 2005-2006 (Value B) and asks "A is what percent greater than B?". The formula is (A - B) / B * 100%.
Step 3: Detailed Explanation:
First, let's calculate the profits for the relevant years from the graph:

Profit 2007 = Revenue(29M) - Expenses(15M) = $14M

Profit 2008 = Revenue(26M) - Expenses(29M) = -$3M (a loss)
The monetary change in profit from 2007 to 2008 is:
Change(07-08) = (-3M) - (14M) = -17M
The absolute value of this change is A = $17M.
Now, let's calculate the absolute change from 2005 to 2006 as hypothesized in Step 2:

Profit 2005 = Revenue(24M) - Expenses(21M) = $3M

Profit 2006 = Revenue(26M) - Expenses(24M) = $2M
The monetary change in profit from 2005 to 2006 is:
Change(05-06) = (2M) - (3M) = -1M
The absolute value of this change is B = $1M.
Now, let's apply the "percent greater than" formula to these two absolute changes:
Percent Greater = (A - B) / B * 100%
Percent Greater = (17M - 1M) / 1M * 100% = (16) / 1 * 100% = 1600%
Step 4: Final Answer:
Under the assumption that the question intended to compare the magnitude of the profit change from 2007-2008 with that of 2005-2006, the former is 1600% greater than the latter. This matches option D. (Note: The question as written is highly ambiguous and likely contains errors.)