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The tax on an article decreases by 10% and its consumption increases by 10%. Find the effect per cent on its revenue.
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- 1% increase
- 2% decrease
- 1% decrease
- 2% increase
Correct Option: C
Let the original consumption be 1 unit & tax on it be ₹100.
So, revenue = ₹(100 × 1) = ₹100.
New consumption
= | ![]() | × 1 | ![]() | = | units. | 100 | 10 |
Now, tax on 1 unit = ₹90
Tax on | units | 10 |
= | ![]() | 90 × | ![]() | = ₹ 99. | 10 |
∴ Decrease in revenue = 1 %