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@Sasmita,
He was originally able to buy y kg sugar. After reduction, he can buy (y +1) kg. So,
Original Expense = 128 *y --------------- (1)
After reduction, expense = 120 *( y+1) ----------------(2)
Now, His expense was constant after and before the reduction, so,
128 *y = 120 *( y+1)
On Solving, y = 15kg
But 128/120 =y/(y+1)
Let original price was X.
Now,
X - 6.25% of X = 120
X = 128.
Let he use to buy y kg of sugar originally.
128/120 = (y +1)/y
128y = 120y + 120
8y = 120
y = 120/8 = 15 kg.
Now he gets 16 kg sugar.
So, reduced rate = 120/16 = Rs. 7.5 per kg.
Original Price = 128/15 = Rs. 8.53 per kg.