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%?
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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