The storekeeper bought it for $25. The reason he has the store is to make some money so he can feed his family. The way he does that is to sell things for a little more than he paid for them. The amount he adds on top of his cost is called his "markup".
For this item, he paid $25 to put it in his store, and he decided to sell it for $35. He marked it up by $10 out of $25.
