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Profit and Loss - January 17, 2005
The question for the day is a Math Problem Solving question in Arithmetic from the topic Profit and Loss.
Question
By selling an article at 80% of its marked price, a merchant makes a loss of 12%. What will be the % profit made by the merchant if he sells the article at 95% of its marked price?
A. 5% profit
B. 1% loss
C. 10% profit
D. 5.5% profit
E. 4.5% profit
The correct choice is (E) and the correct answer is 4.5% profit.
Explanatory Answer
Let the marked price be S and the cost price of the article be C
When the merchant sells at 80% of marked price he sells at 0.8S
This results in a loss of 12%.
Loss is always computed as a percentage of cost price.
Therefore, the loss incurred by the merchant = 0.12C
Hence, he will be selling the article at C - 0.12C = 0.88C when he sells at 80% of his marked price.
Equating the two sides of the relation, we get 0.8S = 0.88C
Or S =
Or S = 1.1C.
Now, if the merchant sells at 95% of the marked price, he will be selling at 95% of 1.1C = 1.045C
Hence, the merchant will make a profit of 4.5%.
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