Q:
If the price of a commodity is decreased by 20% and its consumption is increased by 10%, what will be the increase or decrease in the expenditure on the commodity?
Answer & Explanation
Answer: B) decrease 12%
Explanation: Given the price of a commodity is decreased by p = 20%
And its consumption is increased by q = 10%
Now, required increase or decrease in the expenditure on the commodity can be
p + q + pq/100 = -20 + 10 - 200/100 = -10 - 2 = -12%.
Hence, decrease in the expenditure = 12%
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