Profit & Loss Question Answers

Profit, Loss and Discounts - CAT 2007

Question 4 the day : September 2, 2004
The question for the day is a sample practice problem in profit, loss, discounts, an Arithmetic Topic and the problem provides an understanding of the different terms such as Cost Price, List Price, Selling price, Marked Price, Label price, profit margins and loss made, if any.

Question
A merchant marks his goods up by 60% and then offers a discount on the marked price. If the final selling price after the discount results in the merchant making no profit or loss, what was the percentage discount offered by the merchant?

1. 60%
2. 40%
3. 37.5%
4. Depends on the cost price

Correct Answer - 37.5% discount. Choice (3)

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Explanatory Answer

Assume the cost price to be 100.
Therefore, the merchant's marked price will be 100 + 60% of 100 = 160

Now, the merchant offers a discount on the marked price. The discount results in the merchant selling the article at no profit or loss or at the cost price.

That is the merchant has sold the article at 100.

Therefore, the discount offered = 60.

Discount offered is usually measured as a percentage of the marked price.

Hence, % discount =(60/160)*100= 37.5%