CTS Interview General Ability

consider x=y=1
x=y
x^2=xy (multiplying both side by x)
x^2-y^2=xy-y^2 (subtracting y^2 from both side)
(x+y)(x-y)=y(x-y) { since x^y=(x+y)(x-y) }
x+y=y { x-y got cancelled }
i.e, 1+1=1
2=1 (but mathematically it is not correct)
find the twist?

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CTS Other Question

APPLE+PEAR=GRAPE

THEN G+R+A+P+E=? (EXPLAIN BRIEFLY)
what is the largest number that can be expressed with 3 digits