A shopkeeper marks his goods 50% above the cost price and then allows a discount of 25% on the marked price. What is his net profit or loss percentage on the cost price?

Introduction / Context:
This question examines the combined effect of a markup and a discount on the overall profit or loss percentage. The shopkeeper first increases the price by a certain percentage to set the marked price and then gives a discount on that marked price. The net effect on profit is calculated with respect to the cost price. This is a typical exam question and helps strengthen the understanding of successive percentage changes applied on different bases.

Given Data / Assumptions:

• Goods are marked 50% above cost price.
• A discount of 25% is allowed on the marked price.
• We must find the overall profit or loss percentage on the cost price.
• Assume cost price CP = 100 units for simplicity.

Concept / Approach:
First compute the marked price by applying a 50% increase on cost price. Then apply a 25% discount on that marked price to get the selling price. Since profit and loss are based on cost price, we compare the final selling price with the original cost price to find the percentage profit or loss. This procedure is a straightforward application of percentage multipliers: one for markup, another for discount.

Step-by-Step Solution:
Step 1: Let CP = 100.Step 2: Marked price MP = CP + 50% of CP = 100 + 50 = 150.Step 3: Discount = 25% of MP.Step 4: Selling price SP = MP - 25% of MP = 150 - 0.25 * 150.Step 5: 0.25 * 150 = 37.5, so SP = 150 - 37.5 = 112.5.Step 6: Profit = SP - CP = 112.5 - 100 = 12.5.Step 7: Profit percentage = (12.5 / 100) * 100 = 12.5%.Step 8: Therefore there is a net profit of 12.5%.

Verification / Alternative check:
Another way is to use multipliers: a 50% markup corresponds to multiplying cost price by 1.5. A 25% discount corresponds to multiplying marked price by 0.75. Effective multiplier from cost to selling price is 1.5 * 0.75 = 1.125. This means SP = 112.5 when CP = 100, confirming a 12.5% profit. Both calculation styles lead to the same result, verifying the correctness of the answer.

Why Other Options Are Wrong:
Option A (37.5%) confuses the discount amount with the profit. Option B (25.5%) is a random value not supported by the calculation. Option D (25%) would be correct if markup and discount completely cancelled each other in a certain way, which they do not here. Only option C, 12.5%, matches the effective multiplier and the step-by-step numerical calculation.

Common Pitfalls:
Some learners mistakenly add or subtract the percentage values directly (for example, 50% minus 25% equals 25% profit), which ignores the different bases of these percentages. Others apply both percentages on cost price instead of on cost and marked price separately. Always be clear about what each percentage is applied to and use multipliers to avoid confusion with successive percentage changes.

Final Answer:
The shopkeeper makes a net 12.5% profit on the cost price.