If the tax on a commodity is diminished by 20% and its consumption increased by 15%, the revenue decreases by:
Answer & explanation
Correct answer: option 1
Let initial price = 100x
Final price = 100x × \(\frac{80}{100}\) × \(\frac{115}{100}\)
= 100x × \(\frac{4}{5}\) × \(\frac{23}{20}\)
= 92x
Required percentage = \(\frac{100-92}{100}\) × 100 = 8%