There is a child Manav who receives Rs. 100 as his monthly pocket money. He used to spend his entire pocket money on purchasing Pokemon cards, each costing Rs.20. After few months, the price of Pokemon cards fell down to Rs. 10 and his pocket money remained same at Rs. 100. As price of Pokemon cards dropped, what happens to Manav's purchasing power?
Answer & explanation
Correct answer: option 2
The correct answer is option 2: Increases
When the price of Pokémon cards drops from Rs. 20 to Rs. 10, Manav's purchasing power increases. This is because he can now buy more Pokémon cards with the same amount of money.
Here's the reasoning:
- Initially, at Rs. 20 per card, Manav could buy 5 cards with his Rs. 100 pocket money.
- After the price drops to Rs. 10 per card, he can buy 10 cards with the same Rs. 100.
So, his purchasing power increases as he can buy more with the same amount of money.