Question

When cost of petroleum increses by 40% a man reduces his annual consumption by 20 %.Find the percentage change in his annual expenditure on petroleum?

Answer 1

To elaborate by an example, consider the cost of petrol as 70 rupees/ litre and Mr. Brown refills only 70 rupees petrol, no matter the increase or decrease in price.

Now if the cost is increased to 20% it will be

= 70+(20%*70)

=84 rupees/ litre.

So the price difference is 84–70=14 rupees/ litre.

Now if the expenditure should be same so that Mr. Brown will pay only 70 rupees, then he must be consuming less petrol. ( i.e lesser than 1 litre.). So he will consume :

i.e (70 rupees / 84 rupees)*1 litre= 0.8333 litre.

Reduction in quantity of petrol consumed by Mr. Brown= 1 litre –0.83333 litre= 0.1666 litre.

Therefore percentage reduction of petrol consumption by Mr. Brown

=(1–0.8333)*100= 16.67 %

OR

Simply (14/84)*100 = 16.66 %