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The price of coffee decreases by 25% and a person ends up consuming more coffee.If his expenditure on coffee increases by 20%,by what percentage did his consumption increase?
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The price of coffee decreases by 25% and a person ends up consuming mo...
The price of coffee decreases by 25% and a person ends up consuming more coffee. If his expenditure on coffee increases by 20%, by what percentage did his consumption increase?

Given information:
- The price of coffee decreases by 25%
- The person's expenditure on coffee increases by 20%

To find the percentage increase in consumption, we need to analyze the relationship between the price, expenditure, and consumption.

Analysis:
Let's assume initially the person's expenditure on coffee was 100 units and the price per unit was 10 units. This means the person initially purchased 10 units of coffee.

After the price decrease of 25%, the new price per unit will be (10 - (25% of 10)) = 7.5 units.

Now, let's calculate the new expenditure on coffee after the price decrease and the consumption increase.

Step 1: Calculate the new price per unit
- Initial price per unit = 10 units
- Price decrease = 25%
- New price per unit = 10 - (25% of 10) = 7.5 units

Step 2: Calculate the new expenditure on coffee
- Initial expenditure = 100 units
- Price decrease = 25%
- New price per unit = 7.5 units
- New expenditure = (100 units) * (7.5 units) = 750 units

Step 3: Calculate the consumption increase
- Initial consumption = (Initial expenditure) / (Initial price per unit) = 100 units / 10 units = 10 units
- New consumption = (New expenditure) / (New price per unit) = 750 units / 7.5 units = 100 units

Step 4: Calculate the percentage increase in consumption
- Initial consumption = 10 units
- New consumption = 100 units
- Increase in consumption = (New consumption - Initial consumption) = 100 units - 10 units = 90 units
- Percentage increase in consumption = (Increase in consumption / Initial consumption) * 100 = (90 units / 10 units) * 100 = 900%

Therefore, the person's consumption increased by 900% due to the decrease in coffee price and the increase in expenditure.

Conclusion:
The person's consumption increased by 900% due to the 25% decrease in coffee price and the 20% increase in expenditure.
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Similar UPSC Doubts

In a poor country like India, as income rises people first concentrate on increasing their consumption of what they regard as basic or more essential consumer goods. For the poor, these goods would primarily include cereals and for people at successive levels of higher income protective foods, simple non-food consumer goods, more modern, better quality non-food consumer goods and simple consumer durables, better quality consumer goods, and so on. When the demand for basic and more essential consumer goods is more or less met, demand for the next higher level of consumer goods begins to impinge on consumer decision making and their consumption increases. There is thus a hierarchy of income levels and a hierarchy of consumer goods. As incomes rise and one approaches the turning point referred to, there is an upward movement along the hierarchy in the demand for consumer goods which exhibits itself in a relative increase in the demand for these goods. If one examines the past consumption behaviour of households in India, one finds confirmation of the proposition just made. Until the mid seventies one notices a rise in the proportion of consumption expenditure on cereals, and thereafter, a steady decline reflecting a progressive increase in the relative expenditure on non-cereal or protective foods. About the same time the rising trend in the share of food in total consumption expenditure also begins to decline, raising the proportion of expenditure on non-food consumer goods. Simultaneously one also notices a sharper rise in the proportion of expenditure on consumer durables. Thus, what one sees is an upward movement in consumer demand along the hierarchy of consumer goods which amounts to a major change in consumer behaviour.Whenever there is a decline in the proportion of consumption expenditure on cereals

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The price of coffee decreases by 25% and a person ends up consuming more coffee.If his expenditure on coffee increases by 20%,by what percentage did his consumption increase?
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