Question

The Price of diesel increases by 25%. To what extent a person can reduce quantity of diesel consumption so that his budget is not upset?

• A. 25%
• B. 20%
• C. 33%
• D. None

Answer 1

The correct option is B 20%

Suppose you had a budget of Rs. 100. Price of diesel initially is equal to Rs.10/litre. A 25% increase in price would make price of diesel equal to Rs.12.5/litre. Therefore with a budget of Rs. 100, you can now only get 100 divided by 12.5, which would give the new number of litres of diesel. This is equal to 8 litres, The reduction in quantity is (10-8)/10= 2/10 = 20%