GMAT Profit & Loss Practice Questions with Solution

Profit and loss are vital for resolving related GMAT questions. The table below outlines the core concepts and formulas.

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Profit and loss questions in the GMAT quantitative section evaluate your capacity to apply fundamental mathematical concepts to practical situations. These problems frequently combine multiple calculation layers involving percentages, ratios, and sequential transactions. By identifying the problem types that regularly appear, you can plan your strategy to solve them swiftly and accurately. Below are the main categories of profit and loss questions you might face on the GMAT:

1. Basic Profit or Loss Calculation

These represent direct problems where you must find the profit or loss based on a given cost price and selling price. Such questions check your grasp of the core definitions and formulas for profit, loss, and their respective percentages.

2. Profit/Loss Percentage

These questions entail finding the percentage profit or loss generated from a transaction. Frequently, the question supplies either the cost price or the selling price and asks you to calculate the missing value.

3. Marked Price and Discount

Marked price and discount questions require you to compute the selling price after a discount is applied to a marked price. These problems may also integrate profit calculations, where you need to assess how the discount affects overall profitability.

4. Successive Transactions

Within these questions, an item may be bought and sold multiple times, with each transfer incorporating a specific percentage of profit or loss. You will need to determine the cumulative effect on the final selling price.

5. Break-even Analysis

Break-even problems center on discovering the price or volume at which zero profit or loss occurs. They serve to assess your comprehension of the interplay between cost, revenue, and profit.

Comprehending these groups guarantees you can recognize and apply the correct formula or technique during the test. Let us now examine 15 practice questions to reinforce your understanding of these principles.

Profit and loss questions form a frequent category of problems within the GMAT quantitative section, built to test your ability to apply basic mathematical theories to real-world contexts. By working through a variety of questions, you can sharpen your problem-solving capabilities and boost your speed and precision for this portion. Here are several questions and answers to assist you in grasping profit and loss problems:

Question 1

A shopkeeper buys an item for $800 and sells it for $920. What is the profit percentage?

SolutionTo find the profit percentage:Profit = Selling Price (SP) - Cost Price (CP)Profit = $920 - $800 = $120

Profit Percentage = (Profit ÷ CP) × 100= ($120 ÷ $800) × 100 = 15%

The shopkeeper made a 15% profit.

Question 2

A product is sold at a 20% discount on its marked price of $1,000. What is the selling price?

SolutionDiscount = 20% of Marked Price (MP)= (20 ÷ 100) × $1,000 = $200

Selling Price (SP) = Marked Price - Discount= $1,000 - $200 = $800

The selling price is $800.

Question 3

A retailer marks up the cost price of an item by 30% and then offers a 10% discount. If the cost price is $500, what is the selling price?

SolutionMarked Price (MP) = Cost Price + 30% of Cost Price= $500 + (30 ÷ 100) × $500 = $650

Discount = 10% of Marked Price= (10 ÷ 100) × $650 = $65

Selling Price (SP) = Marked Price - Discount= $650 - $65 = $585

The selling price is $585.

Question 4

A trader purchases 50 items at $40 each and sells all of them for $2,500. What is the profit or loss percentage?

SolutionTotal Cost Price (CP) = 50 × $40 = $2,000Total Selling Price (SP) = $2,500

Profit = SP - CP = $2,500 - $2,000 = $500

Profit Percentage = (Profit ÷ CP) × 100= ($500 ÷ $2,000) × 100 = 25%

The trader made a 25% profit.

Question 5

An article marked at $750 is sold for $600 after successive discounts of 10% and 10%. What is the cost price?

SolutionFirst Discounted Price = $750 - (10 ÷ 100) × $750 = $750 - $75 = $675

Second Discounted Price = $675 - (10 ÷ 100) × $675 = $675 - $67.50 = $607.50

The selling price after both discounts is $607.50.

Question 6

A product costs $200 to manufacture. If a retailer wants a 25% profit after giving a 10% discount, what should be the marked price?

SolutionDesired Selling Price (SP) = $200 + (25 ÷ 100) × $200 = $250

Marked Price (MP) = SP ÷ (1 - Discount Percentage)= $250 ÷ 0.9 = $277.78

The marked price should be $277.78.

Question 7

A dealer sold a TV for $12,000, earning a profit of 20%. What was the cost price?

SolutionCost Price (CP) = Selling Price ÷ (1 + Profit Percentage)= $12,000 ÷ 1.2 = $10,000

The cost price was $10,000.

Question 8

A person bought a chair for $400 and sold it at a 15% loss. What was the selling price?

SolutionLoss = 15% of Cost Price (CP)= (15 ÷ 100) × $400 = $60

Selling Price (SP) = Cost Price minus Loss = $400 - $60 = $340

The selling price amounted to $340.

Question 9

A shopkeeper grants a 15% discount on an item marked at $1,200 and still achieves a 10% profit. What is the cost price?

Solution: Selling Price (SP) = $1,200 - (15 / 100) multiplied by $1,200 = $1,200 - $180 = $1,020

Cost Price (CP) = SP / (1 + Profit Percentage) = $1,020 / 1.1 = $927.27

The cost price came to $927.27.

Question 10

A trader sells two products for $600 each. On the first, he makes a 20% gain, and on the second, he incurs a 20% loss. What is the net gain or loss?

Solution: Cost Price of Item 1 = SP / (1 + Gain Percentage) = $600 / 1.2 = $500

Cost Price of Item 2 = SP / (1 - Loss Percentage) = $600 / 0.8 = $750

Total Cost Price = $500 + $750 = $1,250. Total Selling Price = $600 + $600 = $1,200

Loss = Total Cost Price - Total Selling Price = $1,250 - $1,200 = $50

The net loss equals $50.

Question 11

An item is marked at $800 and sold for $640 following a 20% discount. If the cost price stands at $500, what is the profit percentage?

Solution: Profit = Selling Price - Cost Price = $640 - $500 = $140

Profit Percentage = (Profit / CP) multiplied by 100 = ($140 / $500) multiplied by 100 = 28%

The profit percentage is 28%.

Question 12

A merchant purchases merchandise at a 25% discount off the marked price of $1,000 and disposes of them at a 10% profit over the marked price. What is the selling price?

Solution: Cost Price (CP) = Marked Price - Discount = $1,000 - (25 / 100) multiplied by $1,000 = $750

Selling Price (SP) = Marked Price + 10% of Marked Price = $1,000 + $100 = $1,100

The selling price is $1,100.

Question 13

A product is acquired for $900 and sold for $1,080. What is the profit percentage?

Solution: Profit = SP - CP = $1,080 - $900 = $180

Profit Percentage = (Profit / CP) multiplied by 100 = ($180 / $900) multiplied by 100 = 20%

The profit percentage is 20%.

Question 14

A vendor buys a quantity of goods for $5,000. He marks up the merchandise by 50% but subsequently provides a 30% discount. What is the selling price?

Solution: Marked Price (MP) = $5,000 + 50% of $5,000 = $7,500

Selling Price (SP) = MP - 30% of MP = $7,500 - (30 / 100) multiplied by $7,500 = $5,250

The selling price is $5,250.

Question 15

A seller experiences a 10% loss when disposing of an article for $450. What ought to be the selling price to secure a 20% profit?

Solution: Cost Price (CP) = SP / (1 - Loss Percentage) = $450 / 0.9 = $500

Desired Selling Price (SP) = CP multiplied by (1 + Profit Percentage) = $500 multiplied by 1.2 = $600

The selling price required to achieve a 20% profit should be $600.

Achieving a strong score on Profit and Loss problems in the GMAT demands a blend of grasping fundamental concepts, practicing proper strategies, and applying them efficiently during the test. These tasks typically involve computing percentages, markups, discounts, and losses, which can appear complex initially, yet with the correct strategy, they become much simpler to handle. Presented below are several helpful guidelines to assist you in performing well on GMAT Profit and Loss questions:

1. Understand Key Formulas

The foundation of solving Profit and Loss items is maintaining a solid grasp of essential formulas such as:

• Profit/Loss = Selling Price (SP) - Cost Price (CP)
• Profit Percentage = (Profit / Cost Price) multiplied by 100
• Loss Percentage = (Loss / Cost Price) multiplied by 100

2. Use Approximations for Quick Calculations

At times, exact calculations may be unnecessary, particularly when time is running short. In those instances, utilizing estimations or rounding values can assist you in reaching the solution more rapidly. This proves especially advantageous when working with percentages or large figures.

3. Work with Ratios and Proportions

Profit and Loss questions frequently involve ratio and proportion mathematics. Learn to quickly recognize connections between values, such as the proportion of gain or loss relative to the cost price. Comprehending these associations enables you to resolve problems faster, particularly when figures alter proportionally.

4. Master Marked Price and Discount Calculations

Numerous questions require determining the selling price following a markdown or markup. Keep in mind that:

• Selling Price = Marked Price - Discount
• Marked Price = Selling Price / (1 - Discount Percentage)

The ability to manipulate these formulas swiftly will empower you to resolve such inquiries free of confusion.

5. Practice with Different Scenarios

GMAT Profit and Loss items appear in multiple formats. You might encounter situations where a discount applies to the marked price, or where gain and loss are derived across multiple transactions. The broader the range of styles you practice with, the more adaptable you remain during the assessment.

Avoid Overcomplicating the Problem

Should a question feel overly intricate, pause and re-evaluate. Frequently, these items are structured around straightforward answers, meaning you should refrain from overthinking. Divide the exercise into smaller segments, concentrating on essential factors like cost price, selling price, and percentages that lead straight to the proper outcome.

Use the Process of Elimination

When uncertain regarding an answer, apply the method of elimination. Discard clearly false choices and concentrate on remaining possibilities. This preserves time and raises your likelihood of picking the correct response, notably during intricate percentage-oriented queries.

Time Management is Crucial

Profit and Loss queries generally prove straightforward once concepts are mastered, but they can equally consume considerable time. Train under strict time constraints to guarantee you do not allocate excessive minutes to a solitary inquiry during the test. Target spending no more than 2 to 3 minutes per item to successfully finish the entire segment.