Question

The price of cooking oil has increased by 25%. The percentage of reduction that a family should effect in the use of cooking oil so as not to increase the expenditure on this account is
(a) 25%
(b) 30%
(c) 20%
(d) 15%

Answer 1

Hint: In order to solve this problem, we need to assume a base price and then continue with the calculation. We can calculate the exact increase in the price with the assumed price and then calculate the reduction to compensate for the increase with respect to the new price of the product.

Complete step-by-step answer:
We need to find the increase in the expenditure on this account in account to the condition that the price has increased by 25%.
We can solve this by assuming a base price.
We can take any amount because eventually, we have asked for a relative increase so the result would be the same.
We can assume that let the original price be Rs. 100.
Now we have the condition that the price has increased by 25%.
We need to find 25% of Rs.100.
Therefore, 25% of 100 = ${\displaystyle \frac{25}{100}}\times 100=25$ .
Adding Rs. 25 to Rs. 100 we get, 100+25 = Rs.125.
Hence, the increased price is Rs. 125.
In order to or not to increase the expenditure, the family needs to be the reduction.
The reduction has by the same amount that is Rs.25
Therefore, now the reduction of 25 out of the new price of Rs.125.
We need to calculate the percentage therefore; we need to multiply the ratio by 100.
Therefore, the percentage of reduction = ${\displaystyle \frac{25}{125}}\times 100=20$ .
So, the correct answer is “Option C”.

Note: We need to understand that the reduction is with respect to the new price and not by the base price Rs.100. The new price is RS. 125, the ratio is taken with respect to 125. Also, in the beginning, we can imagine any value for the base price, because we will eventually take the ratio and the answer would remain the same.