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Question 106
The GST on groceries is reduced by 20% and its consumption increases by 15% . Find the percentage of effect on revenue.
Solution
Revenue is the product of spending and consumption. Hence, this is a case of successive percentage change.
The multiplying factor of reduction of 20% is 0.8, while that of increase by 15% is 1.15.
Assuming the initial revenue be X, we get the new revenue as X$$\times\ 1.15\times\ 0.80$$, which 0.92X.
This means there is a reduction of 8% in the revenue.
