The owner of a garment shop labelled his articles at 25% above the cost-price. Due to a slump in the market, his cost price was reduced by 5% but he keeps the marked price same. He thus offers a discount of 8%, due to which the sales increase by 25%. Calculate the change in owner's profit?

profit remains unchanged.

The correct answer is Option (3) → profit remains unchanged.

Let the original cost price (CP) of one article = 100

Step 1: Original marked price

Marked at 25% above CP
MP = 125

Step 2: New cost price after reduction

Cost price reduced by 5%
New CP = 95

Step 3: Selling price after discount

Discount = 8% on MP
SP = 92% of 125 = 115

Step 4: Profit per article (new)

Profit = 115 − 95 = 20

Profit % per article = $\frac{20}{95} \times 100 \approx 21.05\%$

Step 5: Compare with original situation

Original profit per article = 25
Original profit % = 25%

Sales increase by 25%, so total profit depends on both profit per article and quantity sold.

• Original total profit ∝ 25 × 100 = 2500
• New total profit ∝ 20 × 125 = 2500

Result

Total profit remains the same.

Correct answer: profit remains unchanged.