Explanation:

C.P. of 1.5=3/2 litre of milk = Rs. 20

C.P. of 1 litre of milk = Rs. 20×2/3 = Rs. 40/3

C.P. of 1 litre of water =0

From question,

Mean price Rs.10 2/3 = Rs. 32/3

By the rule of alligation, we have:

C.P of 1 litre        C.P of 1 litre

   of water               of milk

     (0)                  (Rs.40/3)

             \                /
            Mean Price

              (Rs.32/3)

             /               \

  (40/3−32/3)          (32/3−0)

      =8/3                   =32/3

Ratio of water and milk = 8/3:32/3

=8:32 = 1:4

Thus, Quantity of water to be added to 60 litres of milk: (Note it is extra water that is to be added and final solution is not of 60 litre but more than that).

(1/4×60)litres =15 litres

Hence, option 1 is the correct answer.