Multiple choice

Considering the rising inflation, Government has decided to reduce goods and service tax levied on sugar, so that its cost is reduced by 11.63%. By what percentage should the consumption of sugar be increased, so that revenue of Government remains unchanged?

  1. 10%

  2. 12%

  3. 13.16%

  4. 11.25%

  5. 15.64%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If cost is reduced by 11.63%, the new price is 100 - 11.63 = 88.37. To keep revenue constant (Price * Consumption = Constant), 100 * 1 = 88.37 * (1 + x). 1 + x = 100 / 88.37 = 1.1316. So x = 13.16%.

AI explanation

Using the rule for unchanged revenue when price changes, if the price is reduced by R percent, the consumption must be increased by (R / (100 - R)) multiplied by 100. Substituting the given price reduction of 11.63 into the formula gives (11.63 / (100 - 11.63)) multiplied by 100, which simplifies to (11.63 / 88.37) multiplied by 100. This calculation results in an approximate consumption increase of 13.16%. The result is 13.16%.

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