If the price of a commodity is increased by 20%, by what percent the Consumption of that commodity should be reduced so that the expenditure does not increase ?

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AFCAT 11th Aug 2024 (Shift 1) Memory Based Paper.
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  1. 16%
  2. \(16\frac{2}{3}\%\)
  3. \(16\frac{1}{3}\%\)
  4. 18%

Answer (Detailed Solution Below)

Option 2 : \(16\frac{2}{3}\%\)
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AFCAT 16th Feb 2024 (Shift 1) Memory Based Paper.
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100 Questions 300 Marks 120 Mins

Detailed Solution

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Given:

Price increase = 20%

Formula used:

Let initial consumption be 100 units.

Expenditure = Price × Consumption

New expenditure = Old expenditure

Let the reduced consumption be x.

Calculation:

New price = 120% of old price

120 × x = 100 × 100

⇒ x = (100 × 100) ÷ 120

⇒ x = 83.33

Reduction in consumption = 100 - 83.33

⇒ Reduction = 16.67%

∴ The correct answer is option 2.

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