Product No Type Calories per serving Price per 100 g (Rs) Typical spending per week (Rs) Price elasticity of demand

1 Fruits 330 0.19 1 1.128

2 Vegetables 70 0.18 1.72 0.83

15 Pasta 770 0.19 1.48 0.845

17 Bread 480 0.265 1.32 0.292

28 Snacks 216.5 0.565 2.44 0.27

29 Candy 863.5 0.34 3.8 0.295

30 Milk 1026 0.045 1.16 1.793

31 Butter 437 0.075 0.72 1.972

The above table shows the spending per week in each product of a consumer whose total expenditure on food is Rs 40, with typical spending patterns across food categories. Suppose that the price of category 30, milk product, increased by 5%:

a) By what percentage would his demand for milk products fall?

b) Calculate the quantity he consumes, in grams, before and after the price change.

c) Calculate his total expenditure on milk products before and after the price change. You should find that expenditure falls.