Explanations:The concept of cost price is fundamental in understanding basic economics and commerce. When an individual or a business purchases an item, the cost price (CP) is the total amount paid to acquire that item. This includes the purchase price as well as any additional costs such as taxes, transportation, and other expenses incurred to bring the item to its current state and location.
The cost price is a crucial component in determining the financial outcome of a transaction. When the item is sold, the selling price (SP) is compared to the cost price to determine whether a profit or a loss has been made. If the selling price is higher than the cost price, the difference is the profit. Conversely, if the selling price is lower than the cost price, the difference is the loss.
It is important to note that the cost price is not always the same as the purchase price. Additional costs such as transportation, import duties, and other expenses can increase the total cost price. For example, if an item is purchased for ₹100 and an additional ₹20 is spent on transportation and taxes, the cost price would be ₹120.
Understanding the cost price is essential for making informed decisions in business and personal finance. It helps in setting appropriate selling prices, calculating potential profits, and managing inventory costs effectively. In the context of the question, the term "Cost Price" accurately describes the price at which an article is purchased, making it the correct answer.