Change in Health Care Cost per Employee

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Last year the average health care cost per employee in Group G increased by n percent and the average compensation per employee in group G increased by m percent, where n is greater than m. By what percent did the ratio of health care cost per employee to compensation per employee increase, in terms of n and m?

Review: Change in Health Care Cost per Employee


Explanation

In this question, we are dealing with a ratio of two ratios. The overall ratio that we are interested in is



We can consider that the ratio for last year. This year, the top ratio increased by n percent and the bottom one increased by m percent, so this year's ratio is



The question is asking us for a single percentage, call it x, by which the ratio increased. In other words,



Would be the way to express the effect of n and m as a single percentage, x. Solving for x should give the answer. I'd be inclined to finish the algebra here, but I'm a little more algebra-leaning than most people. Let's consider a simple case, with values that may not be realistic but which are allowed and easy to compute. What if ? Then , because in that case there was no change the first year, and the overall rate of change was just the rate of change in the second year. We can apply that simple test to the answer choices. We can plug in and see which cases give us n. Only (B) and (D). And (B) is clearly not equal to the above. So my love of algebra was unnecessary.

The correct answer is (D).


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