The price of a commodity is increased by 50%. By what percentage must its consumption be reduced so as to keep the same expenditure on its consumption?
Answer & explanation
Correct answer: option 3
Price × consumption = Total Expenditure (If constant)
(Then increase relation between Price and consumption)
(50% = \(\frac{1}{2}\))
Original : Changed
Price (Ratio) = 2 : 3
Consumption = 3 : 2
↑________ ________↑
-1
Required percentage = \(\frac{1}{3}\) × 100 = 33\(\frac{1}{3}\)%