A dishonest milkman mixes water and milk and claims to sell the milk at cost price, thereby making a profit of 25%. How much water is there in one litre that he delivers to the customers?

A)200 ml
B)250 ml
C)166.66 ml
D)180 ml
E) 320 ml

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Let the cost per ml = $1, implying that the milkman sells the 1000-ml mixture for $1000.
For every $4 in cost, the milkman must make $1 in profit -- a profit of 25% -- yielding a selling price of $5.
Implication:
Of every $5 in the selling price, $4 = cost, $1 = profit.
Since the cost is equal to 4/5 of the selling price, we get:
Cost = (4/5)(1000) = $800, profit = 1000-800 = $200.
Thus, the 1000-ml mixture is composed of 800 ml of milk (at a cost of $800) and 200 ml of water (at a cost of $0).


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A better way to look at the question is, if the merchant is selling something at a profit of 25% what is its cost price.

We can use a relation that if something increases by 1/4 i.e. 25%, we have to reduce that something by 1/5 i.e. 20% to come down to the original price.

1000 needs to be reduced by 20% to know what the actual amount of milk is sold at CP that merchant claims.

1000*1/5 =200ml

Ans: A