The price (per litre) of petrol increases by 40%. By what percent should its consumption be reduced such that the expenditure on it increases by 12% only?

Correct option is B

Given:
The price (per litre) of petrol increases by 40%. The expenditure on it increases by 12% only.
Formula used:
New expenditure = Original expenditure × (1 + Increase in expenditure)
Let the original consumption be 100 litres.
Let the reduced consumption be x litres.
New expenditure = New price × Reduced consumption
Solution:
Let the original price be ₹1 per litre (for simplicity).
Original expenditure = 100 × ₹1 = ₹100
New price = ₹1 + 40% of ₹1 = ₹1 + ₹0.40 = ₹1.4
New expenditure = ₹100 + 12% of ₹100 = ₹100 + ₹12 = ₹112
New expenditure = New price × Reduced consumption
=> ₹112 = ₹1.4 × x
​$$x =\frac{ 112}{ 1.4} = 80$$
=> x = 80%
Therefore, the consumption should be reduced by 100 - 80 = 20%.

Alternative Method: 

Expenditure = Price $$\times$$ Consumption 

​$$40 \% = \frac{2}{5}$$

Old price = 5 unit , New price = 7 Unit 

Increase Expenditure = 12% 

Old expenditure = 100 unit 

New expenditure = 100 + 12 = 112 unit 

According to formula 

Old Consumption  = $$\frac{100}{5}= 20 \text {unit}$$

New Consumption = $$\frac{112}{7}= 16 \text {unit}$$

Change in expenditure = $$\frac{(20 - 16)}{20}\times 100 \% = 20\%$$