In spite of an increase in price of a commodity by 20%, the overall expenditure on it increases by 12 %. What is the percentage decrease in the quantity of commodity consumed?
Answer & explanation
Correct answer: option 4
Let the Price and expenditure = 100
Price Expenditure
100 100
after an increase in price of 20% and in expenditure of 12%
Price Expenditure
120 112
Expenditure must be reduced by 120 - 112 = 8
Percentage of reduction in expenditure = 8 × \(\frac{100}{120}\) = $6\frac{2}{3}$