Another way to solve is by using the strategy Picking Numbers. For percent questions with unknown starting amounts, always choose 100.
Let's say the original weight was 100 ounces, and the original price was $100.
The new weight is 80 ounces (reduced by 20% of 100).
They want to know the INCREASE in price per ounce, so let's find the old price per ounce, and the new price per ounce.
Old Price/Ounce:
$100/100 = $1 per ounce
New Price/Ounce:
$100/80 = $1.25 per ounce
We can clearly see that the increase was 25%, choice (E).