Due to increase of $20 %$ in the price of milk, a family reduces its consumption of milk by $20 %$ . What was the effect on expenditure of that family on account of milk?

2 %

decrease

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3 %

decrease

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4 %

decrease

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5 %

decrease

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Solution

The correct option is C $4 %$ decrease
Let the family's initial consumption be $n$ litres of milk.
and the price of milk be $p$ rupee per litre.
$⟹$ initial expenditure $= R s . n p$
On $20 %$ increase in price, new price $= 1.2 p$
On $20 %$ decrease in consumption, new consumption $= 0.8 n$
$i m p l i e s$ New expenditure $= 1.2 p \times 0.8 n = R s .0 .96 n p$
$⟹$ decrease in expenditure= $\frac{n p - 0.96}{n p} \times 100 = 4 %$

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Due to increase of 20% in the price of milk, a family reduces its consumption of milk by 20%. What was the effect on expenditure of that family on account of milk?

Due to increase of $20 %$ in the price of milk, a family reduces its consumption of milk by $20 %$ . What was the effect on expenditure of that family on account of milk?