smc

Let us say each sheep cost $x$ dollars. The farmer paid $749x$ for the sheep. He sold $700$ of them for $749x$, so each sheep sold for $\frac{749}{700}=1.07x$. Since every sheep sold for the same price per head, and since every sheep cost $x$ and sold for $1.07x$, there is an increase of $\frac{1.07x-1x}{1x}=0.07$, or $7\%$, which is option $\boxed{7}$