The tax on a commodity diminishes by 14% and its consumption increases by 10%. Find the effect on revenue.
Answer & explanation
Correct answer: option 3
14% = \(\frac{7}{50}\) & 10% = \(\frac{1}{10}\)
Ratio of Initial New
Price 50 : 43
Consumption 10 : 11
------------------------------------------------
Revenue 500 : 473
{ Revenue = Income tax × Consumption }
Required percentage = \(\frac{500 - 473}{500}\) × 100
= \(\frac{27}{500}\) × 100
= 5.4%