Final answer:
A person should reduce their petrol usage by approx. 37.5% to maintain the same expenditure after a 60% price rise. The closest answer choice given is 30%. Option B is correct.
Step-by-step explanation:
To maintain the same level of expenditure on petrol despite a 60% price increase, one needs to reduce the usage of petrol. If we let the original price be P, the increased price is 1.6P. Let the original quantity be Q, and the new quantity needed be Qn. We want the cost to remain the same, so P × Q = 1.6P × Qn. Simplifying, Qn = Q / 1.6.
The percentage decrease in quantity is given by the formula: Percentage change in quantity demanded = [(change in quantity) / (original quantity)] × 100. If we plug the values in, it becomes: [(Q - Q / 1.6) / Q] × 100 which simplifies to (1 - 1 / 1.6) × 100 = 0.375 × 100, which is a 37.5% reduction.
However, since we need an answer from the provided options, and our calculation gives 37.5%, the closest option that would fulfill the expenditure condition would be option b) 30%, since choosing a smaller reduction like 20% wouldn't be enough and 40% would be slightly more than necessary.