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The price of milk has risen by 75%. Find how much percent a household must reduce his consumption so as not to increase his expenditure.?
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The price of milk has risen by 75%. Find how much percent a household ...
Understanding the Problem:
A household's expenditure on milk will increase if the price of milk increases and the consumption remains the same. To prevent an increase in expenditure, the household needs to reduce its consumption by a certain percentage.

Calculating the Increase in Expenditure:
Let's assume the initial price of milk was $100. With a 75% increase, the new price will be $175. If the household consumes x liters of milk initially, their expenditure will be $100x. After the price increase, their expenditure will be $175x.

Determining the Percentage Reduction in Consumption:
To keep the expenditure constant, the household needs to ensure that $175x is equal to $100x. Therefore, the household needs to reduce its consumption by (175-100)/175 = 42.86%.

Explanation:
If the household reduces its consumption by 42.86%, the new consumption will be 57.14% of the initial consumption. This reduction will offset the 75% increase in the price of milk, keeping the household's expenditure constant.

Conclusion:
Therefore, a household must reduce its consumption by 42.86% to ensure that their expenditure on milk does not increase despite the 75% rise in price.
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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.Prices of protective food have risen because

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 milk has risen by 75%. Find how much percent a household must reduce his consumption so as not to increase his expenditure.?
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