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The annual production in cement industry is subject to business cycles. The production increases for two consecutive years consistently by 18% and decreases by 12% in the third year. Again in the next two years, it increases by 18% each year and decreases by 12% in the third year. Talking 2008 as the base year, what will be the approximate effect on cement production in 2012?
  • a)
    24% increase
  • b)
    37% decrease
  • c)
    45% increase
  • d)
    60% decrease
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
The annual production in cement industry is subject to business cycles...
It can easily be determined through this Graphic change:
100 == 18% (Up) ==> 118 == 18% (Up) ==> 139.24 == 12% (down) ==> 122.53 == 18% (up) ==> 144.58 or 145
So, there is 45% rise in production. As initial production was 100 which becomes 145 after the cycle of changes in 2008, 2009, 2010 and 2011.
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Most Upvoted Answer
The annual production in cement industry is subject to business cycles...
Given information:
- Annual production in the cement industry is subject to business cycles.
- Production increases by 18% in two consecutive years consistently.
- Production decreases by 12% in the third year.
- This pattern repeats every three years.

Calculation:
Let's calculate the production from 2008 to 2012 step by step:

Step 1: Calculate the production in 2009:
- The production in 2009 will be 18% higher than the production in 2008.
- So, the production in 2009 = (1 + 0.18) * Production in 2008

Step 2: Calculate the production in 2010:
- The production in 2010 will be 18% higher than the production in 2009.
- So, the production in 2010 = (1 + 0.18) * Production in 2009

Step 3: Calculate the production in 2011:
- The production in 2011 will be 12% lower than the production in 2010.
- So, the production in 2011 = (1 - 0.12) * Production in 2010

Step 4: Calculate the production in 2012:
- The production in 2012 will be 18% higher than the production in 2011.
- So, the production in 2012 = (1 + 0.18) * Production in 2011

Step 5: Simplify the expression for the production in 2012:
- Substitute the value of the production in 2011 from Step 3 into the expression for the production in 2012.
- So, the production in 2012 = (1 + 0.18) * (1 - 0.12) * Production in 2010

Step 6: Simplify further:
- Substitute the value of the production in 2010 from Step 2 into the expression for the production in 2012.
- So, the production in 2012 = (1 + 0.18) * (1 - 0.12) * (1 + 0.18) * Production in 2009

Step 7: Simplify further:
- Substitute the value of the production in 2009 from Step 1 into the expression for the production in 2012.
- So, the production in 2012 = (1 + 0.18) * (1 - 0.12) * (1 + 0.18) * (1 + 0.18) * Production in 2008

Step 8: Calculate the final result:
- Simplify the expression for the production in 2012.
- So, the production in 2012 = (1 + 0.18) * (1 - 0.12) * (1 + 0.18) * (1 + 0.18) * (1 + 0.18) * Production in 2008

Simplifying the above expression gives us the approximate effect on cement production in 2012, which is a 45% increase compared to the production in
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The annual production in cement industry is subject to business cycles. The production increases for two consecutive years consistently by 18% and decreases by 12% in the third year. Again in the next two years, it increases by 18% each year and decreases by 12% in the third year. Talking 2008 as the base year, what will be the approximate effect on cement production in 2012?a)24% increaseb)37% decreasec)45% increased)60% decreaseCorrect answer is option 'C'. Can you explain this answer?
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