Gopal bought a cell phone and sold it to Ram at 10% profit. Then Ram wanted to sell it back to Gopal at 10% loss. What will be Gopal's position if he agreed?
- (a) Neither loss nor gain
- (b) Loss 1%
- (c) Gain 1% ✓ UPSC's answer
- (d) Gain 0·5%
Why the answer is (c)
• Let the original cost price (CP) of the phone for Gopal be 100.
• Gopal sells it to Ram at a 10% profit, so the selling price (SP) for Gopal (and CP for Ram) is 100 + 10 = 110.
• Ram sells it back to Gopal at a 10% loss on his cost price of 110.
• The selling price for Ram is 110 - (10% of 110) = 110 - 11 = 99.
• Gopal buys the phone back for 99, which is less than his original cost of 100.
• Therefore, Gopal makes a gain of 100 - 99 = 1, which is a 1% gain on his original investment.
Why the other options are wrong
- (a) Neither loss nor gain
- Gopal's final cost (99) is lower than his initial cost (100), resulting in a net gain, not a break-even position.
- (b) Loss 1%
- Gopal ends up with a lower cost basis (99 vs 100), which constitutes a gain, not a loss.
- (d) Gain 0·5%
- The calculation yields a difference of 1 unit on a base of 100, which is exactly 1%, not 0.5%.
Asked in the CSAT Paper II of the UPSC Civil Services Preliminary Examination 2017, held on 18 June 2017. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.