The tax on a commodity diminishes by 14% and its consumption increases by 10%. Find the effect on revenue.

Decreases by 5.4%

14% = \(\frac{7}{50}\)  & 10% = \(\frac{1}{10}\)

Ratio of                    Initial        New

Price                          50      :    43

Consumption              10      :    11

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Revenue                  500      :   473

{ Revenue = Income tax × Consumption }

Required percentage = \(\frac{500 - 473}{500}\) × 100

= \(\frac{27}{500}\) × 100

= 5.4%