Correct Answer - Option 2 : 4.375%
Given:
% increase in price = 6.25%
% decrease in consumption = 10%
Concept:
Since, the percentage change is asked in the question, consider the original price and original consumption of the family to be 100%, then proceed.
Formula used:
Price × Consumption = Expenditure
% change = [(Initial value - Final value)/Initial value] × 100
Calculation:
Let, the original consumption = 100y
Original price = 100x
% increase in price = [6(1/4)]% × 100x
= (25/400) × 100x
= 6.25x
∴ New price = 100x + 6.25x
= 106.25x
% decrease in consumption = 10% of 100y
= (10/100) × 100y
= 10y
∴ New consumption = 100y - 10y
= 90y
∴ Initial expenditure = Initial price × Initial consumption
= (100x) × (100y)
= 10000xy
Final expenditure = (106.25x) × (90y)
= 9562.5xy
∴ % change in expenditure = [(10000xy - 9562.5xy)/10000xy] × 100
= 437.5/100
= 4.375%