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    Question

    If the price of an essential good rises by 18% and the

    consumer decreases his consumption by 12%, what will be the percentage change in the expenditure?
    A 28% increase Correct Answer Incorrect Answer
    B 12% decrease Correct Answer Incorrect Answer
    C 18% decrease Correct Answer Incorrect Answer
    D 4% increase Correct Answer Incorrect Answer

    Solution

    Let the original quantity be ‘x’ units and the price be Rs. ‘y’.Initial expenditure = Rs. xy

    New increased price = Rs. 1.18y

    Reduced consumption = 0.88x

    New expenditure = 1.18y × 0.88x = Rs. 1.0384xy

    Image

    Hence, the expenditure increases by approximately 4%

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