If the price of oil increases by 25 percent and Arpit increase the expenditure on oil by 10 percent, then by how much percent will he reduce the quantity of oil purchased?

Question

Question

This question was previously asked in

SSC GD Constable (2022) Official Paper (Held On : 25 Jan 2023 Shift 2)

Answer 1

Given:

The price of oil increases by 25 percent

Expenditure on oil increases by 10 percent

Concept:

The effect of price rise on the quantity purchased, given a change in expenditure.

Solution:

Let the initial price be P and the initial quantity be Q, so initial expenditure = PQ

New price = P + 25% of P = 1.25P

New expenditure = PQ + 10% of PQ = 1.1PQ

Quantity purchased at new price = new expenditure/new price = 1.1PQ/1.25P = 0.88Q

Reduction in quantity purchased = Q - 0.88Q = 12% of Q

Therefore, the correct answer is 12 percent.

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