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4GMAT Math Tutor - Profit Loss Discounts - April 29, 2005
Question
If the cost price of 20 articles is equal to the selling price of 25 articles, what is the % profit or loss made by the merchant?
A. 25% loss
B. 25% profit
C. 20% loss
D. 20% profit
E. 5% profit
The correct choice is (C) and the correct answer is 20% loss.
Explanatory Answer
Let the cost price of 1 article be $1.
Therefore, cost price of 20 articles = 20 * 1 = $20
The selling price of 25 articles = cost price of 20 articles = $20.
Now, we know the selling price of 25 articles. Let us find the cost price of 25 articles.
Cost price of 25 articles = 25 * 1 = $25.
Therefore, profit made on sale of 25 articles = Selling price of 25 articles - cost price of 25 articles
= 20 - 25 = -$5.
As the profit is in the negative, the merchant has made a loss of $5.
Therefore, % loss = 
% loss =  = 20% loss.
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