Subject: General Aptitude · Chapter: Profit and Loss · Exam: · Marks: · Difficulty:
A merchant marks his goods at 25\% above the cost price. Due to a slump in the market, his cost reduces by 5\%. He thus offers a discount of 8\% due to which the sales go up by 25\%. Compute the change in the merchant's profit.
(a)5\% higher
(b)$7 \frac{1}{2} \%$ higher
(c)8\% lower
(d)Unchanged
Answer
Answer (as printed): D
Explanation
Let the C.P. of each article be ₹ 100 and the number of pieces sold be $x$. Then, original S.P. $=₹ 125$. Original profit $=₹[(125-100) x]=₹ 25 x$. New C.P. $=₹ 95$. New S.P. $=92 \%$ of $₹ 125=₹\left(\frac{92}{100} \times 125\right)=₹ 115$. Number of articles sold now $=1.25 x$. New profit $=₹[1.25 x(115-95)]=₹ 25 x$. Hence, the profit remains unchanged.
Explanation as extracted from the printed page; notation may be imperfect.