A shopkeeper marks the price of an article 20% above its cost price. He offers some discount on the marked price and gains a profit of 8%. Rate of discount is

Take the cost price as 100. The marked price is then 120, and an 8% profit means the selling price must be 108. The discount is therefore 120 minus 108, which is 12 rupees. Since discount is always calculated on the marked price, the rate is 12/120 = 10%. So B is correct.

Checking the wrong options:

• A (8%): the selling price becomes 110.4, a profit of 10.4%, not 8%.
• C (12%): the selling price becomes 105.6, which is a loss of 5.6%.
• D (15%): the selling price becomes 102, a profit of only 2%.

The core concept is the relation between markup, discount and profit. Profit is measured on cost, while discount is measured on marked price. This is basic trade arithmetic, and the same logic appears in consumer price and margin questions.

Trap: the 12% figure is the gap between the 20% markup and the 8% profit, and many aspirants pick it without computing the discount on the marked price.