Multiple choice

The price of oil increases by 8.33% and its consumption decreases by 10%. What is the percentage increase/decrease in the expenditure on it?

  1. 2.5%

  2. 7.14%

  3. 5%

  4. 3.4%
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A Correct answer
Explanation

Let initial price = 100, consumption = 100 units. New price = 108.33, new consumption = 90. Initial expenditure = 100 × 100 = 10000. New expenditure = 108.33 × 90 = 9749.7. Change = (9749.7-10000)/10000 × 100 = -2.5%. Option C (5% decrease) would require final expenditure of 9500, which is too large a drop.

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