Multiple choice

The price of wheat falls by 16% By what percentage a person can increase the consumption of wheat so that his overall budget does not change?

  1. 16%

  2. 18%

  3. 18.5%

  4. 19%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If price falls by 16%, it becomes 84% of original. To keep budget same, consumption * price = constant. New consumption * 0.84 * Original Price = Original Consumption * Original Price. New consumption = Original / 0.84 = 1.1904 * Original. Increase is 19.04%.

AI explanation

If the price of wheat falls by 16%, the new price becomes 84% of the original price, or 0.84. Assuming the budget remains constant at 1, the new consumption becomes 1 / 0.84 = 100 / 84 = 25 / 21. The increase in consumption is (25 / 21) - 1 = 4 / 21. Converting this fraction to a percentage gives (4 / 21) * 100 = 400 / 21 = 19.04%, which rounds to 19%. The person can increase consumption by 19%.

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