The cost price of an article is ₹500. A shopkeeper sells it at a discount of 20% on the marked price. If the marked price is ₹600, what is the shopkeeper’s profit or loss percentage?

Correct — B. The discount comes off the marked price; profit or loss is measured on the cost price.

Discount: 20% of 600 = ₹120
Selling price: 600 − 120 = ₹480

Loss: 500 − 480 = ₹20
Loss %: 20⁄500 × 100 = 4% → option (b)

Why the others are wrong

• (a)
  5% Profit — 5% profit needs a selling price of ₹525. After 20% off ₹600 the article sells for ₹480, below the ₹500 cost, so there is no profit.
• (c)
  8% Profit — 8% profit needs a selling price of ₹540, which is only 10% off ₹600. At 20% off, the price is ₹480, a loss.
• (d)
  10% Loss — 10% loss needs a selling price of ₹450, a 25% discount on ₹600. The 20% discount leaves ₹480, a loss of ₹20, which is 4% of ₹500.

Three prices, two bases. Discount % is on the marked price; profit or loss % is on the cost price.

The ₹600 tag is 20% above the ₹500 cost, and the discount takes 20% off the tag. Chained: 1.2 × 0.8 = 0.96 of cost, a 4% loss. A 20% rise followed by a 20% cut does not return to the start, because the cut is taken on the larger price.

Key facts

• Selling price = marked price × (1 − discount⁄100).
• Profit % and loss % are calculated on the cost price.
• A rise of x% followed by a fall of x% is a net fall of x²⁄100 percent. Here 20²⁄100 = 4%.

Common traps

• Assuming a 20% markup and a 20% discount cancel out to no profit and no loss.
• Dividing the ₹20 loss by the ₹480 selling price instead of the ₹500 cost.

No directly related past PYQ was found.