Multiple choice

Directions : Select the correct alternative from the given choices. If the price of a commodity increases by 20%, by what percent should a family reduce its consumption of that commodity, such that the expenditure by the family on the commodity increases by only 8%?

  1. 8%

  2. 10%

  3. 15%

  4. 25%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let initial price be 100 and consumption be 100. Expenditure = 10,000. New price = 120. New expenditure = 10,000 * 1.08 = 10,800. New consumption = 10,800 / 120 = 90. Reduction = 100 - 90 = 10%.

AI explanation

Using the formula for percentage reduction in consumption, (R / (100 + R)) x 100, where R is the net increase in expenditure of 8%. The required reduction in consumption is (8 / 108) x 100, which equals 80 / 108 or 10%. Therefore, the family must reduce its consumption by 10%.

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