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kevincan
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Call the answer to the question f and write the following :

1.2f/1.5 + 1.2(1-f) /1.25 = 0.9
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Edited for clarity !
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I solved it like this. Diesel in rural area takes 1.5 times ahead. Or in other words the new car needs only 2/3rd fuel to cover the same distance as the old car in rural area. So assuming gasoline cost as $100, diesel cost is $120 and the new car uses 2/3rd diesel so $80 cost.
Similarly for urban area since it takes 1.25 times ahead the new car needs only 4/5th fuel. So 4/5th of $120 is $96.
But the overall cost is actually $90. (10% less than gasoline so 0.9 of $100)
So this essentially boils down to a simple mixture and alligation problem where 80% solution is mixed with 96% one to get 90% final solution.
In other words 80x + 96 (1-x) = 90. Solve for x to get 3/8.
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Here is an algebraic approach for those interested ->

Setup

Let the distance per gallon covered by the old car be 4x miles/gallon (m/g).

Then,

- Distance/gallon covered by new car in rural areas = 50% farther than 4x = 6x (m/g)
- Distance/gallon covered by new car in non-rural areas = 25% farther than 4x = 5x (m/g)

Let the cost per gallon of gasoline be 5c ($/g)

Then,

- Diesel's cost per gallon = 20% more = 6c ($/g)



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I usually start with Rs. 100 and 100 miles for such questions. Makes calculations easier.

Old car
Rs. 100 mileage for 100 miles.

New Car
Rs. 120 for 150 miles Rural
Rs. 120 for 125 miles elsewhere

Lets say total miles covered 200. Rural miles R.
Saves 10%. So total cost 180.

180 = (120/150) R + 120/125 (200 - R)
On solving this R = 75.

75/200 = 3/8. A
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