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The monthly expenditure of Neha is 20% more than that of Nitu. Let’s assume the monthly expenditure of Nitu is ‘y’. monthly expenditure of Neha = (100+20)% of y = 120% of y = 1.2y The monthly savings of Nitu is 6000 less than that of Neha. Let’s assume the monthly savings of Neha is ‘z’. monthly savings of Nitu = (z-6000) The average monthly income of Nitu and Neha is Rs. 72000. Sum of monthly income of Nitu and Neha = 72000x2 = 144000. So y+1.2y+z+(z-6000) = 144000 2.2y+2z-6000 = 144000 1.1y+z-3000 = 72000 1.1y+z = 75000 z = (75000-1.1y) Eq.(i) If Nitu’s monthly expenditure is 78.125% of her monthly income. y = 78.125% of (y+(z-6000)) y = 0.78125x(y+z-6000) Eq.(ii) Put Eq.(i) in Eq.(ii). y = 0.78125x(y+75000-1.1y-6000) y = 0.78125x(69000-0.1y) y = 53906.25-0.078125y 1.078125y = 53906.25 y = 50000 monthly expenditure of Neha = 1.2y = 1.2x50000 = 60000 Put the value of ‘y’ in Eq.(i). z = (75000-1.1x50000) = (75000-55000) = 20000 monthly savings of Neha = z = 20000 Required percentage = (60000/20000)x100 = 300%
The production indifference curve is also known as:
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