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CLAT Exam  >  CLAT Questions  >  The Municipality of a town increases water ta... Start Learning for Free
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:
  • a)
    4% increase
  • b)
    4% decrease
  • c)
    5% increase
  • d)
    5% decrease
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
The Municipality of a town increases water tax by 20% and water consum...
We should realize that: Expenditure = Tax x Consumption
Now, we are not given any values for either of the above three variables. So we can assume any convenient values for them.
Let Initial tax be 100 and Initial consumption be 100.
So Initial expenditure = 100 x 100 = 10000
Now New tax = 120 and New consumption = 80.
Then New Expenditure = 120 x 80 = 9600
Clearly consumption has reduced by 10000 – 9600 = 400
So % decrease = decrease/Initial Value x 100 = 400/10000 x 100 = 4%
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Most Upvoted Answer
The Municipality of a town increases water tax by 20% and water consum...
Increase in Water Tax: 20%
Decrease in Water Consumption: 20%

To calculate the percentage of increase or decrease in monthly expenditure, we need to consider the effects of both the increase in water tax and the decrease in water consumption on the overall expenditure.

Let's assume the original monthly expenditure on water was $100.

1. Increase in Water Tax:
The water tax is increased by 20%. Therefore, the new water tax would be 100 + (20% of 100) = $120.

2. Decrease in Water Consumption:
Water consumption decreases by 20%. Therefore, the new water consumption would be 100 - (20% of 100) = $80.

Now, let's calculate the new monthly expenditure after considering both the increase in water tax and the decrease in water consumption.

New Monthly Expenditure = (New Water Tax) x (New Water Consumption)
= $120 x $80
= $9600

Now, let's calculate the percentage change in the monthly expenditure compared to the original expenditure.

Percentage Change = ((New Monthly Expenditure - Original Monthly Expenditure) / Original Monthly Expenditure) x 100
= (($9600 - $100) / $100) x 100
= (9500 / 100) x 100
= 95%

Since the percentage change is positive, it indicates an increase in the monthly expenditure. Therefore, the correct answer is option 'B' - 4% decrease.
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Community Answer
The Municipality of a town increases water tax by 20% and water consum...
100×100=10000
120×80 =9600
10000-9600=400
400/10000×100=4%
::4% decrease
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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:a)4% increaseb)4% decreasec)5% increased)5% decreaseCorrect answer is option 'B'. Can you explain this answer?
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