Multiple choice

If the price of an article is increased by 25%, then in order to keep the expenditure same the percentage reduction in consumption will be ?

  1. 15%

  2. 20%

  3. 25%

  4. 30%

  5. 33%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let price be 100 and consumption be 100. Expenditure = 10000. New price = 125. New consumption = 10000 / 125 = 80. Reduction = 100 - 80 = 20%.

AI explanation

The formula for the percentage reduction in consumption to keep expenditure constant when a price increases by R% is (R / (100 + R)) multiplied by 100. Substituting the 25% price increase into the formula gives (25 / 125) multiplied by 100. This calculation results in a 20% reduction in consumption.

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