Question

A merchant marks the price of his articles 20% above the cost price. If he allows 20% discount, what is the profit or loss per cent ?

A. 2% loss
B. 4% profit
C. 4% loss
D. No profit/loss

Answer 1

If the merchant marks up the price by 20% above the cost price and then offers a 20% discount, the profit or loss percentage can be calculated using the formula (Loss/Cost Price) * 100. In this case, the profit or loss percentage is 4% loss. Therefore, the correct option is C.

Step-by-step explanation:

To calculate the profit or loss percentage, we need to understand the relationship between the selling price, cost price, and the percentage discount given. If the merchant marks up the price by 20% above the cost price and then offers a 20% discount, the selling price will be the same as the cost price.

Let's assume the cost price of an article is $100. The merchant marks up the price by 20%, which makes the selling price $120. Now, if the merchant offers a 20% discount on the selling price, the discounted selling price will be 80% of $120, which is $96.

Since the selling price of $96 is equal to the cost price of $100, there is a loss of $4. To calculate the loss percentage, we divide the loss by the cost price and multiply by 100: ($4/$100) * 100 = 4%. Therefore, the answer is C. 4% loss.