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  • If the price of a commodity be raised by 20% then by how much % a house holder reduce his consumption so that the expenditure does not change?Option: 1

If the price of a commodity be raised by 20% then by how much % a house holder reduce his consumption so that the expenditure does not change?

Option: 1

16.66%


Option: 2

18.66%


Option: 3

10.66%


Option: 4

1.66%


Answers (1)

best_answer

Expenditure = rate x consumption

Here the expenditure remains constant in both the cases

Initially 1x1=1

After change 1.2 x a=1

This means 1.2a = 1 and a = .833 and hence decrease will be 16.66%

 

Posted by

Anam Khan

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