Correct Answer - Option 2 : 36%

**Given :**

A shopkeeper gained 25% while allowing 20% discount

**Formula used :**

Selling price = Marked price - discount on marked price

Selling price = cost price + profit on cost price

**Calculations :**

Let the initial cost price be 100x

Selling price = 100x + 25% of 100x

⇒ 125x

Selling price = Marked price - 20% of marked price

Marked price = 625x/4 = 156.25x

Now Cost price got decreased by 20%, so new cost price

New cost price = 80x

New selling price = 80x + 25% of 80x

⇒ 100x

Discount per cent on marked price to get this selling price

Discount per cent = (Marked price - selling price)/(Marked price) × 100

⇒ (156.25x - 100x)/(156.25x) × 100

⇒ 36%

**∴ Discount should be 36% **