alleryA shopkeeper marks goods 25% above cost and then allows a 20% discount. His overall result is:
AA profit of 5 per cent
BA loss of 5 per cent
CA profit of 20 per cent
DNeither profit nor loss
Answer & Solution
Correct answer: D. Neither profit nor loss
1. Take the cost price as 100 to keep the arithmetic simple.
2. Marking 25 per cent above cost makes the marked price 125.
3. A 20 per cent discount takes 20 per cent of 125, which is 25.
4. So the sale price is 125 - 25 = 100.
5. Sale price equals cost price, so there is neither profit nor loss. Subtracting the percentages as 25 - 20 = 5 is the trap, because they are taken on different bases.
_Source: syllabus Maths, Ch 7 'Comparing Quantities', S7.2 Finding Discounts_
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