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You are here: Home » GMAT Test Prep Problem » Profit Loss & Discounts » Question 1

The given question is from the topic Profit and Loss and is about finding the percent profit made by a merchant.

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?

1. 25% loss
2. 25% profit
3. 20% loss
4. 20% profit
5. 5% profit
   
   

The correct choice is (C) and the correct answer is 20% loss.

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.