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The price of salt is increased by 25% then by how much % should a customer reduce the consumption of salt, so that he has not to increase his expenses on salt?
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The price of salt is increased by 25% then by how much % should a cust...
Introduction
When the price of a commodity increases, consumers tend to reduce their consumption of that commodity to maintain their expenses. This principle is known as the law of demand. In this scenario, we need to determine how much a customer should reduce their consumption of salt to avoid increasing their expenses after a 25% increase in salt prices.

Calculation
Let us assume that the original price of salt is Rs. 100 per kg. After a 25% increase, the new price of salt would be Rs. 125 per kg. To maintain their expenses on salt, the customer needs to spend Rs. 100 on salt after the price increase.

The customer can achieve this by reducing their consumption of salt. Let us assume that the customer initially consumed x kg of salt per month. After the price increase, the customer needs to consume y kg of salt per month to maintain their expenses.

To calculate y, we can use the formula:

Original expenditure = New expenditure
Price per kg * Quantity consumed = Price per kg after increase * New quantity consumed

Substituting the values, we get:

Rs. 100 * x = Rs. 125 * y
y = (100/125) * x
y = 0.8x

Therefore, the customer needs to reduce their consumption of salt by 20% (100% - 80%) to maintain their expenses on salt after a 25% increase in salt prices.

Conclusion
In conclusion, when there is an increase in the price of a commodity, consumers can maintain their expenses on that commodity by reducing their consumption. In this scenario, the customer needs to reduce their consumption of salt by 20% to avoid increasing their expenses after a 25% increase in salt prices.
Community Answer
The price of salt is increased by 25% then by how much % should a cust...
Let's assume the initial rate of salt was Rs 100 per kg, then after 25% increase the new rate becomes 100+( 25% of100 ) kg i.e 125/kg.

Now let's assume customer was buying 1 kg of salt every month for Rs 100, so after the price got increased the customer will have to pay Rs 125 for the same amount of salt i.e 1 kg.

So to avoid increasing his expenses on salt, the customer needs to reduce his consumption by a certain percentage, so let's assume he reduces his consumption by x%.

Hence, the new quantity of salt that the customer will buy is (100-x)% of the original quantity of salt i.e (100-x)/100 * 125 kg, Now as we need to find the value of x that makes the cost of this new quantity of salt equal to Rs 100, we can set up the equation to solve for x i.e (100-x)/100 * 125 = 100.

After solving this equation wet get 20% as the value of x which means that the customer needs to reduce their consumption of salt by 20% to maintain their expenses on salt at Rs 100 after 25% increase in its price.
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Directions: Read the following passage carefully and answer the questions given at the end.Last Thursday Starbucks raised their beverage prices by an average of 1% across the U.S, a move that represented the company's first significant price increase in 18 months. I failed to notice because the price change didn't affect grande or venti (medium and larg e) brewed coffees and I don't mess with smaller sizes, but anyone who purchases tall size (small) brews saw as much as a 10 cent increase. The company's third-quarter net income rose 25% to $417.8 million from $333.1 million a year earlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffee commodity costs, but with the significantly lower coffee costs already improving their profit margins, it seems unlikely this justification is the true reason for the hike in prices. In addition, the price hike was applied to less than a third of their beverages and only targets certain regions. Implementing such a specific and minor price increase when the bottom line is already in great shape might seem like a greedy tactic, but the Starbucks approach to pricing is one we can all use to improve our margins. As we've said before, it only takes a 1% increase in prices to raise profits by an average of 11%.For the most part, Starbucks is a master of employing value-based pricing to maximize profits, and they use research and customer analysis to formulate targeted price increases that capture the greatest amount consumers are willing to pay without driving them off. Profit maximization is the process by which a company determines the price and product output level that generates the most profit. While that may seem obvious to anyone involved in running a business, it's rare to see companies using a value-based pricing approach to effectively uncover the maximum amount a customer base is willing to spend on their products. As such, let's take a look at how Starbucks introduces price hikes and see how you can use their approach to generate higher profits. While cutting prices is widely accepted as the best way to keep customers during tough times, the practice is rarely based on a deeper analysis or testing of an actual customer base. In Starbucks' case, price increases throughout the company's history have already deterred the most price-sensitive customers, leaving a loyal, higher-income consumer base that perceives these coffee beverages as an affordable luxury. In order to compensate for the customers lost to cheaper alternatives like Dunkin Donuts, Starbucks raises prices to maximize profits from these price-insensitive customers who now depend on their strong gourmet coffee.Rather than trying to compete with cheaper chains like Dunkin, Starbucks uses price hikes to separate itself from the pack and reinforce the premium image of their brand and products. Since their loyal following isn't especially price-sensitive, Starbucks coffee maintains a fairly inelastic demand curve, and a small price increase can have a huge positive impact on their margins without decreasing demand for beverages. In addition, only certain regions are targeted for each price increase, and prices vary across the U.S. depending on the current markets in those areas (the most recent hike affects the Northeast and Sunbelt regions, but Florida and California prices remain the same).They also apply price increases to specific drinks and sizes rather than the whole lot. By raising the price of the tall size brewed coffee exclusively, Starbucks is able to capture consumer surplus from the customers who find more value in upgrading to grande after witnessing the price of a small drip with tax climb over the $2 mark. By versioning the product in this way, the company can enjoy a slightly higher margin from these customers who were persuaded by the price hike to purchase larger sizes.Starbucks also expertly communicates its price increases to manipulate consumer perception. The price hike might be based on an analysis of the customer's willingness to pay, but they associate the increase with what appears to be a fair reason. Using increased commodity costs to justify the price as well as statements that aim to make the hike look insignificant (less than a third of beverages will be affected, for example) help foster an attitude of acceptance.According to the author of the passage.

Directions: Read the following passage carefully and answer the questions given at the end.Last Thursday Starbucks raised their beverage prices by an average of 1% across the U.S, a move that represented the company's first significant price increase in 18 months. I failed to notice because the price change didn't affect grande or venti (medium and larg e) brewed coffees and I don't mess with smaller sizes, but anyone who purchases tall size (small) brews saw as much as a 10 cent increase. The company's third-quarter net income rose 25% to $417.8 million from $333.1 million a year earlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffee commodity costs, but with the significantly lower coffee costs already improving their profit margins, it seems unlikely this justification is the true reason for the hike in prices. In addition, the price hike was applied to less than a third of their beverages and only targets certain regions. Implementing such a specific and minor price increase when the bottom line is already in great shape might seem like a greedy tactic, but the Starbucks approach to pricing is one we can all use to improve our margins. As we've said before, it only takes a 1% increase in prices to raise profits by an average of 11%.For the most part, Starbucks is a master of employing value-based pricing to maximize profits, and they use research and customer analysis to formulate targeted price increases that capture the greatest amount consumers are willing to pay without driving them off. Profit maximization is the process by which a company determines the price and product output level that generates the most profit. While that may seem obvious to anyone involved in running a business, it's rare to see companies using a value-based pricing approach to effectively uncover the maximum amount a customer base is willing to spend on their products. As such, let's take a look at how Starbucks introduces price hikes and see how you can use their approach to generate higher profits. While cutting prices is widely accepted as the best way to keep customers during tough times, the practice is rarely based on a deeper analysis or testing of an actual customer base. In Starbucks' case, price increases throughout the company's history have already deterred the most price-sensitive customers, leaving a loyal, higher-income consumer base that perceives these coffee beverages as an affordable luxury. In order to compensate for the customers lost to cheaper alternatives like Dunkin Donuts, Starbucks raises prices to maximize profits from these price-insensitive customers who now depend on their strong gourmet coffee.Rather than trying to compete with cheaper chains like Dunkin, Starbucks uses price hikes to separate itself from the pack and reinforce the premium image of their brand and products. Since their loyal following isn't especially price-sensitive, Starbucks coffee maintains a fairly inelastic demand curve, and a small price increase can have a huge positive impact on their margins without decreasing demand for beverages. In addition, only certain regions are targeted for each price increase, and prices vary across the U.S. depending on the current markets in those areas (the most recent hike affects the Northeast and Sunbelt regions, but Florida and California prices remain the same).They also apply price increases to specific drinks and sizes rather than the whole lot. By raising the price of the tall size brewed coffee exclusively, Starbucks is able to capture consumer surplus from the customers who find more value in upgrading to grande after witnessing the price of a small drip with tax climb over the $2 mark. By versioning the product in this way, the company can enjoy a slightly higher margin from these customers who were persuaded by the price hike to purchase larger sizes.Starbucks also expertly communicates its price increases to manipulate consumer perception. The price hike might be based on an analysis of the customer's willingness to pay, but they associate the increase with what appears to be a fair reason. Using increased commodity costs to justify the price as well as statements that aim to make the hike look insignificant (less than a third of beverages will be affected, for example) help foster an attitude of acceptance.As stated in the passage, an effective way to increase prices would include

Directions: Read the following passage carefully and answer the questions given at the end.Last Thursday Starbucks raised their beverage prices by an average of 1% across the U.S, a move that represented the company's first significant price increase in 18 months. I failed to notice because the price change didn't affect grande or venti (medium and larg e) brewed coffees and I don't mess with smaller sizes, but anyone who purchases tall size (small) brews saw as much as a 10 cent increase. The company's third-quarter net income rose 25% to $417.8 million from $333.1 million a year earlier, and green coffee prices have plummeted, so what gives?Starbucks claims the price increase is due to rising labor and non-coffee commodity costs, but with the significantly lower coffee costs already improving their profit margins, it seems unlikely this justification is the true reason for the hike in prices. In addition, the price hike was applied to less than a third of their beverages and only targets certain regions. Implementing such a specific and minor price increase when the bottom line is already in great shape might seem like a greedy tactic, but the Starbucks approach to pricing is one we can all use to improve our margins. As we've said before, it only takes a 1% increase in prices to raise profits by an average of 11%.For the most part, Starbucks is a master of employing value-based pricing to maximize profits, and they use research and customer analysis to formulate targeted price increases that capture the greatest amount consumers are willing to pay without driving them off. Profit maximization is the process by which a company determines the price and product output level that generates the most profit. While that may seem obvious to anyone involved in running a business, it's rare to see companies using a value-based pricing approach to effectively uncover the maximum amount a customer base is willing to spend on their products. As such, let's take a look at how Starbucks introduces price hikes and see how you can use their approach to generate higher profits. While cutting prices is widely accepted as the best way to keep customers during tough times, the practice is rarely based on a deeper analysis or testing of an actual customer base. In Starbucks' case, price increases throughout the company's history have already deterred the most price-sensitive customers, leaving a loyal, higher-income consumer base that perceives these coffee beverages as an affordable luxury. In order to compensate for the customers lost to cheaper alternatives like Dunkin Donuts, Starbucks raises prices to maximize profits from these price-insensitive customers who now depend on their strong gourmet coffee.Rather than trying to compete with cheaper chains like Dunkin, Starbucks uses price hikes to separate itself from the pack and reinforce the premium image of their brand and products. Since their loyal following isn't especially price-sensitive, Starbucks coffee maintains a fairly inelastic demand curve, and a small price increase can have a huge positive impact on their margins without decreasing demand for beverages. In addition, only certain regions are targeted for each price increase, and prices vary across the U.S. depending on the current markets in those areas (the most recent hike affects the Northeast and Sunbelt regions, but Florida and California prices remain the same).They also apply price increases to specific drinks and sizes rather than the whole lot. By raising the price of the tall size brewed coffee exclusively, Starbucks is able to capture consumer surplus from the customers who find more value in upgrading to grande after witnessing the price of a small drip with tax climb over the $2 mark. By versioning the product in this way, the company can enjoy a slightly higher margin from these customers who were persuaded by the price hike to purchase larger sizes.Starbucks also expertly communicates its price increases to manipulate consumer perception. The price hike might be based on an analysis of the customer's willingness to pay, but they associate the increase with what appears to be a fair reason. Using increased commodity costs to justify the price as well as statements that aim to make the hike look insignificant (less than a third of beverages will be affected, for example) help foster an attitude of acceptance.The author of the passage is of the opinion that

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The price of salt is increased by 25% then by how much % should a customer reduce the consumption of salt, so that he has not to increase his expenses on salt?
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The price of salt is increased by 25% then by how much % should a customer reduce the consumption of salt, so that he has not to increase his expenses on salt? for CAT 2024 is part of CAT preparation. The Question and answers have been prepared according to the CAT exam syllabus. Information about The price of salt is increased by 25% then by how much % should a customer reduce the consumption of salt, so that he has not to increase his expenses on salt? covers all topics & solutions for CAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The price of salt is increased by 25% then by how much % should a customer reduce the consumption of salt, so that he has not to increase his expenses on salt?.
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