Explanation:

Given the price of a commodity is decreased by  p = 20%

And its consumption is increased by q = 10%

Now, required increase or decrease in the expenditure on the commodity can be 

p + q + pq/100

= -20 + 10 - 200/100

= -10 - 2 = -12%.

Decrease in the expenditure = 12%

Hence, option 2 is the correct answer.