Multiple choice

A local trader decided to reduce goods and service tax levied on wheat so that its cost is reduced by 23.84%. By what percentage should the sale of wheat be increased so that revenue of trader remains unchanged?

  1. 18.75%

  2. 14.89%

  3. 13.65%

  4. 31.30%

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let original price be 100 and consumption be 100. Revenue = 10,000. New price = 100 - 23.84 = 76.16. New consumption = 10,000 / 76.16 = 131.30. Increase = 31.30%.

AI explanation

Using the constant revenue formula, the required percentage increase in sales is calculated as negative r divided by 100 plus r, where r is the 23.84% reduction in cost. Substituting the value, we get negative 23.84 divided by 100 minus 23.84, which simplifies to negative 23.84 divided by 76.16. Dividing 23.84 by 76.16 gives exactly 0.3130, which converts to a 31.30% required increase in sales. The result is 31.30%.

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