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If the price of the petrol is increased by 30%, by how much percent a car owner must reduce his…

To keep spending the same after a price rise of \(r\%\), consumption must fall by \(\frac{r}{100+r}\times100\%\). Here that is…

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If the price of the petrol is increased by 30%, by how much percent a car owner must reduce his consumption in order to maintain the same budget ?

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Correct answer C

To keep spending the same after a price rise of r%r\%, consumption must fall by r100+r×100%\frac{r}{100+r}\times100\%. Here that is 30130×100=30013=23113%\frac{30}{130}\times100=\frac{300}{13}=23\tfrac1{13}\%. The cut is less than 30% because it is reckoned against the new, higher price; check: 1.3×(1−313)=1.3×1013=11.3\times\left(1-\frac{3}{13}\right)=1.3\times\frac{10}{13}=1.

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