Arrange the following households (A, B, C and D) in terms of increasing…
2024
Arrange the following households (A, B, C and D) in terms of increasing percentage of expenditure (E) to their income (I)
A. I = 5.0 lakh, E = 4.0 lakh
B. I = 6.0 lakh, E = 4.5 lakh
C. I = 8.0 lakh, E = 5.0 lakh
D. I = 4.8 lakh, E = 3.2 lakh
Choose the correct answer from the options given below:
Answer: C. C, D, B, A — Concept: The share of its income that a household spends is the expenditure-to-income ratio written as a percentage, (E / I) x 100. This is a relative measure…
- A.
D, A, B, C
- B.
D, B, C, A
- C.
C, D, B, A
- D.
D, A, C, B
Attempted by 9 students.
Show answer & explanation
Correct answer: C
Concept: The share of its income that a household spends is the expenditure-to-income ratio written as a percentage, (E / I) x 100. This is a relative measure - it depends only on how the two amounts compare with each other, not on how large they are. A household with the biggest expenditure in rupees therefore need not have the biggest expenditure share, because its income may be larger too.
Application: Convert each household's expenditure into a percentage of its own income.
Household A: (4.0 / 5.0) x 100 = 0.8 x 100 = 80%
Household B: (4.5 / 6.0) x 100 = 0.75 x 100 = 75%
Household C: (5.0 / 8.0) x 100 = 0.625 x 100 = 62.5%
Household D: (3.2 / 4.8) x 100 = (2 / 3) x 100 = 66.67% (approximately)
Household | Income I (lakh) | Expenditure E (lakh) | E as % of I |
|---|---|---|---|
A | 5.0 | 4.0 | 80% |
B | 6.0 | 4.5 | 75% |
C | 8.0 | 5.0 | 62.5% |
D | 4.8 | 3.2 | 66.67% |
Cross-check: comparing the fractions directly gives the same ranking without percentages. 5.0/8.0 = 0.625 is smaller than 3.2/4.8 = 0.667, which is smaller than 4.5/6.0 = 0.75, which is smaller than 4.0/5.0 = 0.8. Note that the household spending the most rupees has the smallest expenditure share, because its income is the largest - exactly the trap the concept above warns about.
Result: arranged in increasing percentage of expenditure to income, the households come in the order C (62.5%), D (66.67%), B (75%), A (80%).