Multiple choice

Due to inflation, the price of diesel in the consumer market increases by 25%. By what percentage should Mr. Singh decrease his consumption of diesel such that his daily expenditure on diesel increases by 5%?

  1. 12.5%

  2. 15%

  3. 16%

  4. 16⅔%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let initial price = 100, consumption = 100, expenditure = 10000. New price = 125. New expenditure = 10500. New consumption = 10500 / 125 = 84. Decrease = 100 - 84 = 16%.

AI explanation

Using the expenditure formula where expenditure equals price multiplied by consumption, the new expenditure is 1.25 multiplied by the new consumption. To achieve a 5% increase in expenditure, the new expenditure must be 1.05, making the new consumption 1.05 divided by 1.25, which is 0.84. The required decrease in consumption is 1 minus 0.84, resulting in a 16% reduction.

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