Question

The price of a commodity has been increased by $60\%$. By what percent must a consumer reduce the consumption of the commodity so as not to increase his expenditure on the commodity?

• A. $30\%$
• B. $35\%$
• C. $27.5\%$
• D. $37.5\%$

Answer 1

Answer: (D)

$37.5\%$

Let the price of the commodity be Rs. $x$ and its consumption be $y$.

Then Expenditure $=$ Rs. $xy$
Increased price $=$ Rs. $\frac{160}{100}x=Rs.1.6x$
Expenditure remaining the same $=$ Rs. $xy$
$\therefore$ Reduced consumption $=\frac{xy}{1.6x}=\frac{10y}{16}=\frac{5}{8}y$ % reduction in consumption
$=\frac{y-5/8y}{y}\times 100$

$=\frac{3}{8}\times 100\%$

$=37.5\%$