If the price of an article is decreased by 20% and then the new price is increased by 25%, then what is the net change in the price?

Correct Option (A)

To determine the net change, let the original price of the article be 100 units for ease of calculation.

• First, the price is decreased by 20%.
• New Price = Original Price - (20% of Original Price)
• New Price = 100 - (0.20 × 100) = 100 - 20 = 80 units.

• Next, this new price is increased by 25%.
• Final Price = New Price + (25% of New Price)
• Final Price = 80 + (0.25 × 80) = 80 + 20 = 100 units.

Comparing the final price (100 units) with the original price (100 units), there is no difference. Therefore, the net change in the price is 0%.

Incorrect Options:

Options B (5% increase) and C (5% decrease) are incorrect. A sequential percentage decrease followed by a percentage increase, where the second percentage is applied to the modified value, does not result in a simple arithmetic sum or difference of the percentages applied to the original value. The calculation demonstrates that the price returns to its initial value.

Option D (Insufficient data) is incorrect. The problem provides all necessary information in terms of percentage changes to calculate the net percentage effect on the price. The actual initial monetary value of the article is not required to determine the percentage change.