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8.1
Consumer Finance
P
urpose
The role this topic plays in quantitative reasoning
Stores and shops have frequent sales where they mark down (discount) various items. The sale items
have most likely been marked up to start with, so that the sellers really aren’t losing money with the sale
prices. Sometimes knowing how to compute cost per unit can help the consumer select the best bargain,
especially in grocery stores, which often offer different sizes of the same product on their shelves.
In addition, customers in most states must pay sales taxes on their purchases. Being able to quickly
calculate and estimate cost even when all these factors are involved, makes for an informed consumer.
(Note that for this activity you will need a scientific calculator and/or a computer with Excel.)
L
earning Goals
What you should learn while completing this activity
1. Be able to calculate prices after single or successive discounts and/or mark-ups.
2. Learn how to determine what percent discount or mark-up has been applied.
3. Develop the skills to calculate the unit price of an item, the sales tax on a purchase, and the cost of a
list of grocery items.
D
iscovery
Finding out for yourself
In order to make a profit, retailers must charge more for their products than they paid for them. The
amount by which they increase the price is called the markup. It is often expressed as a percent.
Watch the video in Link A on the companion website. Are you surprised by the results?
At times, however, retailers wish to lower prices, perhaps to lure customers into the store or to decrease
inventory to make room for new items. The items are put on sale, with their prices discounted, perhaps
by a certain percent.
In the content available at Link B, think about why it works to subtract percents.
Considering the information available at Link C, does it always work to add or subtract percents?
When shopping for groceries or other items, a wise shopper knows how to identify the best buys. One
way to do that is by unit pricing — computing the price per unit of measure. This is done by dividing
the item price by the number of items, ounces, liters, or whatever the unit of measure is, as illustrated in
Link D. It is then easy to compare the items, using the unit prices. Many times grocery stores will show
the unit prices right on the shelf, often in tiny print, making it possible for the observant consumer to
compare unit prices.