Question

The price of milk is increased by 25%. By what percentage should a family decrease the consumption of milk so that there is no change in expenditure?

1. 40%
2. 25%
3. 20%
4. 10%

Answer 1

Correct Answer - Option 3 : 20%

Given:

Price of milk is increased by 25%

Calculation:

Let, Initial cost of milk = Rs. 100x

Initial consumption of milk = y

∴ Initial expenditure = Rs. 100xy

∴ Cost of milk after increase = Rs. [100x + 100x × (25/100)] = Rs. 125x

Let, consumption of milk after price increase = k

∴ Expenditure = Rs. 125kx

According to the question,

⇒ 125kx = 100xy

⇒ k = 4y/5

∴ Percentage decrease in consumption = ((y - (4y/5))/y) × 100% = 20%