GMAT Quant | Profits Practice Q10

The given question is a GMAT 600 level problem solving question in Profit and Loss. This GMAT sample question tests the concept of finding the percent profit or percentage loss made by a merchant.

Question 10: 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

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Video Explanation

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Explanatory Answer | GMAT Profits Q10

Step 1 of solving this GMAT Profits Question: Assume a value for cost price

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.

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Step 2 of solving this GMAT Profits Question: Compute the profit made on sale 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

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Step 3 of solving this GMAT Profits Question: What is the % Profit or Loss?

Because the profit is in the negative, the merchant has made a loss of $5.
Therefore, % loss = \\frac{\text{Loss}}{\text{Cost Price}}) × 100
% loss = \\frac{\text{5}}{\text{25}}) × 100 = 20% loss.
The merchant made a loss of 20%

Choice C is the correct answer.