Coffee price rises by 15%, and a homemaker reduces consumption by 15%. How does her total expenditure on coffee change?

Introduction / Context:
Total expenditure equals price * quantity. When both change by percentages, the new expenditure is the product of the two scale factors. This question highlights why successive equal and opposite percentage changes do not cancel exactly.

Given Data / Assumptions:
Price factor = 1.15 (increase 15%), quantity factor = 0.85 (decrease 15%).

Concept / Approach:
New expenditure factor = 1.15 * 0.85. Multiply these to see if the result is above 1 (increase), equal to 1 (unchanged), or below 1 (decrease). Translate the factor to a percentage change relative to the original expenditure.

Step-by-Step Solution:

Verification / Alternative check:
Consider ₹100 original expenditure for easy comparison. New becomes ₹97.75, confirming a 2.25% drop.

Why Other Options Are Wrong:
“Remains unchanged” is incorrect because 1.15 and 0.85 do not multiply to 1. The 4% values come from approximations or additive reasoning, not accurate multiplication.

Common Pitfalls:
Assuming +15% and −15% cancel. They do not, because the bases differ: the reduction is applied after the increase, making the effect multiplicative.

Final Answer:
Decreased by 2.25%