A cloth merchant professes to sell at a loss of 5%. However, the merchant falsifies the meter scale and gains 25%. What is the measure of the scale, in centimeters, that he uses when measuring 1 meter of cloth? (1 meter = 100 centimeters)

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Official Explanation

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Let's assume that the cost of 1 centimeter of cloth is $1. Therefore, for a meter (100 centimeters), the base cost would be $100.

The merchant claims to sell 1 meter of cloth at a 5% loss, which means he is selling it for $95 (95% of the original cost).

In reality, this $95 still incorporates a 25% gain for the merchant, which means

1.25 \times (\$1 \times \text{actual length in meters}) = \$95

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What this question tests

What it tests

Your ability to apply GMAT math concepts to solve a multi-step problem quickly and accurately. At the 705-805 level, accuracy and speed both matter.

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Overcomplicating the setup — most GMAT problems reward a direct, organized approach over brute calculation.