Each of the two merchants sell an article for ₹1,000. If Merchant A computes his profit on the cost price, while Merchant B computes his profit on the selling price, then they both end up making profits of 25%. By how much is the profit made by Merchant B more than that of Merchant A?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. ₹50.
Merchant A:
Selling Price = ₹1000 and Profit % = 25% (on CP)
So, SP = CP + 25% of CP = 1.25 × CP
1000 = 1.25 × CP ⇒ CP = 1000 ÷ 1.25 = 800
Profit = SP − CP = 1000 − 800 = ₹200
Merchant B (profit on selling price):
Profit % = 25% (on SP)
So, Profit = 25% of 1000 = ₹250
CP = SP − Profit = 1000 − 250 = 750
Difference in profit = Merchant B’s profit − Merchant A’s profit = 250 − 200 = ₹50