Question

Water tax is increased by 20% but its consumption is decreased by 20%. The increase or decrease in the expenditure is

• A. 4% decrease
• B. 4% increase
• C. 8% decrease
• D. 8% increase

Answer 1

The correct option is A 4% decrease

$Sincetax\times consumption=expenditure$

$\therefore$ Net % change in expenditure

$=(x+y+\frac{xy}{100})\%$

$=(20-20-\frac{20\times 20}{100})\%$

$\because$ [x = 20 & y = -20]

= - 4%

$\therefore$ Expenditure decreases by 4%