Understanding the Simple Formula for Cost Price in Economics

Learn the simple formula to calculate cost price (CP) and understand profit and loss in pricing strategies.

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The simple formula for cost price (CP) is CP = SP - Profit or CP = SP + Loss, where SP is the selling price. Profit or Loss is determined based on the difference between the selling price and cost price.

FAQs & Answers

  1. What is the cost price formula in simple terms? The simple formula for cost price (CP) is CP = SP - Profit or CP = SP + Loss, where SP stands for selling price.
  2. How do you calculate profit from cost price? To calculate profit, use the formula Profit = SP - CP, where SP is the selling price and CP is the cost price.
  3. What is the relationship between cost price, selling price, and loss? Loss can be calculated using the formula Loss = CP - SP, indicating how much less the selling price is compared to the cost price.
  4. Why is understanding cost price important in business? Understanding cost price is crucial as it helps in pricing strategies, determining profit margins, and overall financial health of a business.

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