DIRECTIONS for questions 82 and 83: The graph below gives the number of electronic commerce transactions that took place in the last six months of financial year 2005. This graph shows data for private consumption only and does not include corporate electronic commerce activity. The numbers above each bar are in millions, and the average price per unit for each product category is shown in brackets in the legend.
If the airline ticket purchases made through internet increase by 20% and the average price of the airline ticket increases by 25%, then the net increase in revenues from the e-commerce activities worldwide will be ____ per cent of the corresponding pre-price-increase revenues.
Show Hint
Only the airline category changes: volume up 20 per cent, price up 25 per cent, so that category's own revenue rises by a flat 50 per cent. Weight that 50 per cent by the airline category's share of total worldwide revenue (across all four categories, using the bracket prices) to get the overall percentage increase.
Step 1: Read the category quantities and prices from the graph.
The bar graph plots four e-commerce categories across five regions (Asia Pacific, Europe, North America, Latin America, South Africa), with the average price per unit for each category given in the legend: Books at \(\$5\), Video/DVDs/Games at \(\$10\), Airline Tickets/Reservation at \(\$20\), and Clothing/Accessories/Shoes at \(\$15\).
Adding the transaction counts (in millions) for each category across all five regions gives Books = 172, Video/DVDs/Games = 109, Airline Tickets/Reservation = \(25+21+16+16+37=115\), and Clothing/Accessories/Shoes = 80.
Step 2: Find the pre-hike revenue for each category, and the total.
Revenue for a category is transactions multiplied by the average price.
Books: \(172 \times 5 = 860\)
Video/DVDs/Games: \(109 \times 10 = 1090\)
Airline Tickets/Reservation: \(115 \times 20 = 2300\)
Clothing/Accessories/Shoes: \(80 \times 15 = 1200\)
Adding these gives the total worldwide pre-hike e-commerce revenue: \(860 + 1090 + 2300 + 1200 = 5450\)
Step 3: Find the new airline revenue after the volume and price hikes.
Airline ticket purchases increase by 20 per cent in volume, so the new volume factor is 1.2, and the average price increases by 25 per cent, so the new price factor is 1.25. Only this one category changes; the other three stay exactly as they were.
New airline revenue \(= 115 \times 1.2 \times (20 \times 1.25) = 138 \times 25 = 3450\)
So the increase in airline revenue alone is \(3450 - 2300 = 1150\)
Step 4: Express this increase as a percentage of the total pre-hike worldwide revenue.
Since only the airline category changed, the entire increase in worldwide e-commerce revenue is this figure of 1150.
Percentage increase \(= \dfrac{1150}{5450} \times 100 \approx 21\%\)
Final Answer:
The net increase in worldwide e-commerce revenue works out to about 21 per cent of the pre-hike revenue.
\[ \boxed{21\%} \]
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