A merchant marks his goods at 25% above the cost price. Due to a slump in the market, his cost reduces by 5%. He thus offers a discount of 8% due to which the sales go up by 25%. Compute the change in the merchant's profit = ?

Solution(By Examveda Team)

Let the cost price of each article be Rs. 100
and the number of pieces sold be x
Then, original selling price = Rs. 125
Original profit = Rs. [(125 - 100)x] = Rs. 25x
$$\eqalign{ & {\text{New selling price}} \cr & = 92\% {\text{ of Rs}}{\text{. 125}} \cr & = {\text{Rs}}{\text{.}}\left( {\frac{{92}}{{100}} \times 125} \right) \cr & {\text{Rs}}{\text{.}} = {\text{115}} \cr} $$
Number of articles sold now = 1.25x
New profit = Rs. [1.25x (115 - 95)] = Rs. 25x
Hence, the profit remains unchanged.