The expenditure of a household on rent, groceries, and transport is in the ratio 3 : 5 : 2. In the coming year, the cost of rent is expected to increase by 8%, groceries to decrease by 6%, and transport to increase by 10%. What will be the percent change (increase or decrease) in the total household expenditure?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. 1.4% increase.
Let the initial expenditures on rent, groceries and transport be 3x, 5x and 2x respectively.
Total initial expenditure = 3x + 5x + 2x = 10x
New expenditure on rent = 108% of 3x = 3.24x
New expenditure on groceries = 94% of 5x = 4.7x
New expenditure on transport = 110% of 2x = 2.2x
Total new expenditure = 3.24x + 4.7x + 2.2x = 10.14x
Required percentage = [(10.14x - 10x)/10] × 100
⇒ 100 × 0.14/10 = 1.4% increase