Indian Institute of Foreign Trade 2012 Solved Paper

Question : 23 of 128

Marks: +1, -0

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?

24% increase
37% decrease
45% increase
60% decrease

Validate

Solution:

Let 100 be the value in 2008.
In 2009 it will become

100×1.18

In 2010 it will become

100×1.18×1.18

In 2011 it will become

100×1.18×1.18×0.88

In 2012 it will become

100×1.18×1.18×0.88×1.18≈145

thus, the effect

=45%

Hence, option C is the correct answer.

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