A product increases by 20% and then decreases by 20%. Is the final price equal to the original price?

• A. Yes; final price equals the original
• B. No; final price is 88% of the original
• C. No; final price is 96% of the original
• D. It depends on the original price

Answer: (C)

Percent changes stack multiplicatively, so the second change is applied to a different base than the first. Start with the original price P. A 20% increase gives 1.2P. A 20% decrease from that amount is 0.8 × 1.2P, which equals 0.96P. So the final price is 96% of the original, meaning it’s 4% lower than where you started. For example, if P is 100, the final price is 96.