A shopkeeper earns a profit of 37.5% on the selling price. What is his profit percentage on the cost price?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 60%
Take the selling price as Rs 100; the profit is part of it and the rest is the cost price.
SP \(=100\), profit \(=37.5\), so CP \(=100-37.5=62.5\)
Profit percentage on CP \(\displaystyle =\frac{37.5}{62.5}\times100=60\%\)
His profit on the cost price is 60%.
Why the other options are incorrect
Option (2) \(27\frac{3}{11}\%\) — Incorrect. This goes the wrong way: it converts a profit on the CP into a profit on the SP.
Option (3) 62.5% — Incorrect. This is the cost price as a percentage of the SP, not the profit on the cost price.
Option (4) 37.5% — Incorrect. This is the profit on the selling price; on the cost price it is larger, because the cost is smaller than the SP.