Question 92

Price of diesel increased from Rs 45/litre to Rs 50/litre. How much should the consumption of diesel be reduced (in %) so as to increase expenditure by only 5%?

Solution

Expenditure (E) = Consumption (C) × Price (P)

Before the price increased,

E = C1 × 45 ----(1)

After the price increased,

Expenditure increased by 5% = 1.05E

1.05E = C2 × 50 ----(2)

On dividing equation (1) by (2)

⇒ 1/1.05 = (C1/C2) × 45/50

⇒ C1/C2 = 200/189

Required cut in consumption = (200 -189)/200 × 100

⇒ Required cut in consumption = 11/2 = 5.5%

A is correct choice.

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