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A household's spending on groceries, rent and miscellaneous items is in the ratio 3 : 5 : 2. In the coming year groceries are projected to increase by 8%, rent by 4%, and miscellaneous items to decrease by 10%. What is the net percentage change in the total expenditure?

1. 1% decrease
2. 2.4% increase
3. 1.2% increase
4. 0.8% decrease

Correct answer: 2.4% increase

Solution

Treating the parts as 3, 5 and 2 (total 10), the new total is 3(1.08)+5(1.04)+2(0.90)=3.24+5.20+1.80=10.24. That is a rise of 0.24 on 10, i.e. a 2.4% increase.

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