Question

A spends 80% of her income. When her income is increased by 30%, she increases her expenditure by 30%. By what percentage are her saving increased or decreased?
1. Decrease of 30%
2. Increase of 50%
3. Decrease of 50%
4. Increase of 30%

Answer 1

Correct Answer - Option 4 : Increase of 30%

Given:

Percentage of expenditure = 80%

Increment in income = 30%

Increment in expenditure = 30%

Solution:

Let the income of A be 100

⇒ Expenditure = 80% of 100 = 80

⇒ Savings = 100 – 80 = 20

When income increased by 30%

⇒ New income = 100 + 30% of 100

⇒ New income = 100 + 30 = 130

When expenditure increased by 30%

⇒ New expenditure = 80 + 30% of 80

⇒ New expenditure = 80 + 24 = 104

⇒ New savings = 130 – 104 = 26

Increment in savings = 26 – 20 = 6

⇒ Percent increment = 6/20 × 100

⇒ Percent increment = 30%

∴ The savings are increased by 30%