Question

The Municipality of a town increases water tax by 20% and water consumption decreased by 20%. Then the percentage of increase or decrease in the monthly expenditure is: 

Options

• 4% increase 

• 4% decrease

• 5% increase 

• 5% decrease 

Answer 1

The Municipality of a town increases water tax by 20% and water consumption decreased by 20%. Then the percentage of increase or decrease in the monthly expenditure is: 4% decrease

Answer 2

4% decrease

Explanation:

Let initially rate of water tax was ₹ 100

By increasing the water tax rate by 20% per 1000 litre
then, water tax of 1000 litre = 120

Also, when consumption is reduced by 20%

new consumption`=1000xx80/100=800` litre

Now, water tax of 800 litres `=120/1000xx800=₹ 96`

Percentage decrease in expenditure

`=(100-96)/100xx100=4%`decrease