If the price of a commodity is decreased by 20% and its consumption is increased by 20%, what will be the increase or decrease in the expenditure on the commodity ?
Options:
A . 8% increase
B . 4% decrease
C . 4% increase
D . 8% decrease
Answer: Option B Answer: (b) Let the CP of each article =Rs.100 and consumption = 100 units Initial expenditure = Rs. (100 × 100) = Rs.10000 New price of article = Rs.80 Consumption = 120 units Expenditure = Rs.(120 × 80) = Rs.9600 Decrease = Rs.(10000 – 9600) = Rs.400 Percentage decrease = ${400 × 100}/10000$ = 4% Using Rule 3, If an amount is increased by a% and then it is reduced by a% again, then the percentage change will be a decrease of $a^2/100%$
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