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Problem 1 - Entrance Test

A merchant has a scale that is inaccurate. It always reads 1 kg more than the actual weight. If the merchant sells 100 items, each of which actually weighs 1 kg but is sold based on the scale reading, and he sells each item for $10, what is his actual profit if he bought each item for $5?

Correct: C

The scale reads 1 kg more, so each item appears to weigh 2 kg. The merchant effectively sells 100 items * 2 kg/item = 200 kg worth of goods. However, the 100 items only weighed 1 kg each. So, effectively the customer buys 100kg that wasn't there. The cost of the items = 100 items * $5/item = $500. The revenue is 100 items * $10/item = $1000. The profit is $1000 - $500 = $500