A shopkeeper initially set the price of a product with a 35% profit margin. Due to poor sales, he decided to offer a 30% discount on the selling price. Will he make a profit or a loss? Give reasons for your answer.
Given: Let Cost Price = ₹100
Calculation: Marked Price with 35% profit = ₹135 30% discount on ₹135 = ₹40.50 Final Selling Price = ₹135 - ₹40.50 = ₹94.50 Loss = ₹100 - ₹94.50 = ₹5.50
Answer: He makes a loss of ₹5.50 (5.5% loss).
Reason: Since ₹94.50 < ₹100, the final selling price is less than the cost price, resulting in a loss.
Explanation
The chapter explains that successive percentages don't simply add. A 35% markup followed by 30% discount doesn't result in 5% profit. The discount is applied to a larger base (₹135), resulting in a larger absolute discount.
Solution Steps
Let Cost Price = ₹100
Marked Price with 35% profit = ₹135
30% discount on ₹135 = ₹40.50
Final Selling Price = 135 - 40.50 = ₹94.50
Loss = 100 - 94.50 = ₹5.50 (5.5% loss)