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sugar

by ddm » Mon Sep 08, 2008 1:35 pm
The price of sugar is increased by 20% and its consumption is reduced by 20%. Find out the net increase/decrease in expenditure on sugar?

(A) 4 % increase

(B) 6% decrease

(C) 4 % decrease

(D) 6% increase

(E) No change
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by VP_Jim » Mon Sep 08, 2008 3:46 pm
Let's plug in some numbers.

Let's say that, originally, the price of sugar is $100 per bag and people consume 1,000 bags per year, so they spend $100,000 total on sugar.

After the changes, the price has increased to $120 per bag (20% increase) and the consumption has decreased to 800 bags per year (20% decrease). So, after these changes, people spend 120*800=$96,000 on sugar.

So, the total spent on sugar has decreased by 4% - answer C.
Jim S. | GMAT Instructor | Veritas Prep
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