Compare single versus successive discounts on $500 Find the difference (in dollars) between: (A) a single 40% discount on $500, and (B) two successive discounts of 36% and 4% on $500.

Introduction / Context:
Successive discounts multiply the remaining price factors, whereas a single discount uses one percentage on the list price. This question asks for the difference between the total discounts obtained under the two methods on the same base of $500.

Given Data / Assumptions:

• List price = $500.
• Single discount = 40%.
• Successive discounts = 36% then 4%.

Concept / Approach:
Total discount equals list price minus net selling price. Compute the final price under each method, then subtract to find the difference in total discount dollars.

Step-by-Step Solution:
Single 40% discount: price = 500 * (1 − 0.40) = 500 * 0.60 = $300 ⇒ discount = $200.Successive 36% then 4%: price = 500 * 0.64 * 0.96 = 500 * 0.6144 = $307.20 ⇒ discount = 500 − 307.20 = $192.80.Difference in discounts = 200 − 192.80 = $7.20.

Verification / Alternative check:
Net successive discount = 1 − (0.64 * 0.96) = 1 − 0.6144 = 38.56%. Compare to 40% single; difference is 1.44% of $500 = $7.20, same result.

Why Other Options Are Wrong:
$0 suggests they are equal; $2 and $1.93 are too small; $20 confuses with 4% of 500 when not accounting for succession.

Common Pitfalls:
Adding successive discounts arithmetically (36% + 4% = 40%) is incorrect; successive discounts operate multiplicatively.

Final Answer:
$ 7.20