The tax on a commodity is diminished by 18% and its consumption increases by 13%. Find the effect on

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05 Nov 2021 Revenue

The tax on a commodity is diminished by 18% and its consumption increases by 13%. Find the effect on revenue

OPtion

1. 6.25%
2. 6.5%
3. 7.2%
4. 7.34%
5. 7.50%
6. 8.25%
7. 7.75%
8. 6.75%
9. 6.80%
10. None of the above

Solution

Since tax × consumption = revenue
∴ Net% change in revenue = {x + y - (xy/100)} %
=[ -18 + 13 - {(18 x 13) / 100}]%
= -7.34%
∴ The revenue decreases by 7.34%

Correct Option: 4 Best Solution (3)