When the cost rises but the price does not — Aptitude
When the cost rises but the price does not: A trader makes a 20% profit. If his cost price rises by 25% but he… Answer and worked solution on CodeKairo.
- Topic: Profit & Loss
- Section: Quantitative Aptitude
- Difficulty: Medium
- Time target: 75 seconds
Question
A trader makes a 20% profit. If his cost price rises by 25% but he keeps the selling price unchanged, what is his new position?
Options
- 4% loss
- 5% loss
- No profit, no loss
- 4% profit
Show the answer and the worked solution
Correct answer: A. 4% loss
Worked solution
- CP = 100, SP = 120.
- New CP = 125, SP still 120.
- Loss = 5 on a cost of 125 = 4% loss.
Answer: 4% loss.
The idea
Recompute the percentage against the new cost, not the old one. Taking 5 against the original 100 gives 5%, which is the offered trap.
Shortcut. The sale stays at 120 while the cost becomes 125, so SP/CP = 120/125 = 24/25 = 0.96 — a 4% loss.
Common trap. "5% loss" — taking the ₹5 shortfall against the original cost of 100 rather than the new cost of 125.