When Leo imported a certain item, he paid a 7 percent import…

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Last Updated on May 3, 2023

GMAT OFFICIAL GUIDE PS

Solution:

Although this problem seems challenging it is actually a simple word translation.

We know that when Leo imports a certain item he pays a 7% import tax on the portion of the total value IN EXCESS OF $1,000. “In excess of” is the key phrase here, and it means that Leo does not pay any tax on his items until he hits $1,000. The best way to complete this problem is to set up an equation.

First, let’s say that T = total value of the item, and, therefore, (T – 1000) is the portion that is taxable.

Next, we can create an equation to determine T:

87.5 = 0.07(T – 1,000)

87.5 = 0.07T – 70

157.5 = 0.07T

157.5/0.07 = T

15,750/7 = T

T = 2,250

Answer: C

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