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If the price of the commodity is increased by 50% by what fraction must its consumption be reduced so as to keep the same expenditure on its consumption?
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Question: If the price of the commodity is increased by 50% by what fraction must its consumption be reduced so as to keep the same expenditure on its consumption?
Solution:
Let the initial price of the commodity be 100.
After a 50% increase in price, It will become, 100, and a 50% increase will be 150.
Now, we have to reduce the consumption to keep expenditure 100.
Increase in price= 150 - 100 = 50
We have to reduce the consumption = (50/150) × 100
= 33.33% or 1/3
Solution:
Let the initial price of the commodity be 100.
After a 50% increase in price, It will become, 100, and a 50% increase will be 150.
Now, we have to reduce the consumption to keep expenditure 100.
Increase in price= 150 - 100 = 50
We have to reduce the consumption = (50/150) × 100
= 33.33% or 1/3