The tax on commodity is reduced by 20%. Due to reduction in tax, the consumption is increased by 12%. Find the effect on revenue.
a)
89.6% decrease
b)
10.40% decrease
c)
5.2% decrease
d)
44.8% increase
The tax on commodity is reduced by 20%. Due to reduction in tax, the consumption is increased by 12%. Find the effect on revenue.
a)
89.6% decrease
b)
10.40% decrease
c)
5.2% decrease
d)
44.8% increase
Question ID - 55714 | SaraNextGen Top Answer
The tax on commodity is reduced by 20%. Due to reduction in tax, the consumption is increased by 12%. Find the effect on revenue.
a)
89.6% decrease
b)
10.40% decrease
c)
5.2% decrease
d)
44.8% increase
|
The tax on commodity is reduced by 20%. Due to reduction in tax, the consumption is increased by 12%. Find the effect on revenue. |
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|
a) |
89.6% decrease |
b) |
10.40% decrease |
c) |
5.2% decrease |
d) |
44.8% increase |
1 Answer
127 votes
Answer Key / Explanation : (b) -
Here consumption increases by 12% and tax reduced by 20%
New revenue=new tax rate × new consumption rate=80%×112% of the original
=
of the original
∴ % effect=the revenue change=100-89.6=10.4%
127 votes
Answer Link
127