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If the price of petral is increased by 20% by what percentage should the consumption be decreased by the consumer if the expenditure on petrel remains unchanged?

Correct answer: A. 16 2/3%

  • A. 16 2/3%
  • B. 6 2/3%
  • C. 8%
  • D. 15%

Explanation

Let the original price and consumption be P and Q, giving expenditure PQ. After a 20% price increase, the price is 1.20P, so unchanged expenditure requires new consumption = PQ ÷ 1.20P = 5Q/6. The decrease is Q − 5Q/6 = Q/6 = 16 2/3% of Q. The likely mistake is choosing 20% because the price rose by 20%, ignoring that the required percentage decrease is calculated from the new consumption relationship.

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