GMAT Percentage Questions | Q5

A GMAT 575 level problem solving Percentage Question.The concept tested in this GMAT sample question is that of percentage increase in price leading to a corresponding percent decrease in quantity.

Question 5: If the price of gasoline increases by 25% and Ron intends to spend only 15% more on gasoline, by what % should he reduce the quantity of petrol that he buys?

1. 10%
2. 12.5%
3. 8%
4. 12%
5. 6.66%

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Video Explanation

Play Video: GMAT 575 Level Ratios Practice Question 5 Video Solution

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Explanatory Answer | GMAT Percentage Question 5

Step 1 of solving this GMAT Percentage Question: Assume values before price increase

The best way to solve questions that provide all information in percent terms is to assume something to be 100.
Amount spent on gasoline = Price × Quantity

In this case, let us take the initial price per unit of gasoline to be $100.
Let Ron buy 1 unit of gasoline at this price.
So, amount spent by Ron = 1 × 100 = $100

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Step 2 of solving this GMAT Percentage Question: Find values after the price increase

Price increases by 25%.
Therefore, new price per unit = $100 + 25% of 100 = $125
Ron intends to increase the amount he spends on gasoline by only 15%.
Amount Ron is willing to spend on gasoline = $100 + 15% of 100 = $115.

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Step 3 of solving this GMAT Percentage Question: Compute change in gasoline quantity due to price increase

Amount spent on gasoline = Price × Quantity
Let the new quantity of gasoline that he can get for $115 be 'q'.
125 × q = 115
Or q = \\frac{115}{125}) = \\frac{23}{25})

Before the price increase, he was able to get 1 unit. Now, he will get only \\frac{23}{25}) units.
So, he gets (1- \\frac{23}{25})) = \\frac{2}{25}) units lesser after the price increase.

Percentage reduction in quanity of gasoline he can buy = \\frac{\text{Decrease in quantity}}{\text{Initial quantity}}) × 100
= \\frac{\frac{2}{5}}{1}) × 100 = 8%
Percentage reduction in gasoline consumption = 8%

Choice C is the correct answer.