A retailer buys 20 pens for Rs. 40 and sells it at the rate Rs. 40 for 15 pens. What is the profit margin?

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  1. 100%
  2. 50%
  3. 33%
  4. 25%

Answer (Detailed Solution Below)

Option 3 : 33%
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Detailed Solution

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Calculation:

A retailer buys 20 pens for Rs. 40.

So, the cost price of 1 pen = 40/20 = Rs. 2

A retailer sells the pens at the rate of Rs. 40 for 15 pens.

So, the selling price of 1 pen = 40/15 = Rs. 8/3

Profit percent = [(Selling Price - Cost Price)/Cost Price] × 100

Profit percent = [(8/3 - 2)/2] × 100

Profit percent = (2/6) × 100

Profit percent = 100/3 = 33%

So, the profit margin is 33%.

Hence, option 3 is correct.

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