Question

If the price of the commodity is increased by 50% by what fraction must its consumption be reduced so as to keep the same expenditure on its consumption?

• A. 1/4
• B. 1/3
• C. 2/3
• D. 1/5

Answer 1

Answer:

B. 1/3

Let the initial price of the commodity be 100. After 50% increase in price, It will become 150 Now, we have to reduce the consumption to keep expenditure 100. Increase in price= 150 - 100 = 50 We have to reduce the consumption, =(50/150)*100=33.33% or 1/3