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: Find how much the airline category itself grows.
A 20 per cent rise in the number of airline ticket purchases means the volume multiplies by 1.2, and a 25 per cent rise in the average ticket price means the price multiplies by 1.25. Multiplying these together, the airline category's own revenue multiplies by \(1.2 \times 1.25 = 1.5\), a flat 50 per cent jump inside that one category alone. This 50 per cent is the growth rate WITHIN the airline segment; it is not yet the answer, because the question asks for the effect on the WHOLE worldwide e-commerce revenue, not on the airline segment by itself.
Step 2: Find what share of total worldwide revenue the airline category holds.
Reading the graph, the airline ticket transactions across the five regions are 25, 21, 16, 16 and 37 million, adding to 115 million, and the price bracket for this category is \(\$20\), so its pre-hike revenue is \(115 \times 20 = 2300\).
The other three categories, using their own bracket prices of \(\$5\), \(\$10\) and \(\$15\), give revenues of 860, 1090 and 1200 respectively (transaction counts of 172, 109 and 80 million respectively, each times its own price). Adding all four categories, the total worldwide revenue is \(860+1090+2300+1200 = 5450\).
The airline category's share of this total is \(\dfrac{2300}{5450}\), which is close to 42 per cent of all worldwide e-commerce revenue.
Step 3: Scale the category's own 50 per cent jump down by its share of the total.
Since the other three categories (books, video/DVDs/games, and clothing/accessories/shoes) are unchanged, the rise in total revenue is exactly the airline category's own rise, weighted by how much of the total it represents. Books, video and clothing contribute zero extra revenue here, so they simply dilute the airline segment's 50 per cent jump down to a smaller overall per cent.
Percentage rise in total revenue \(= \dfrac{2300}{5450} \times 50\% = 0.4220 \times 50\% \approx 21.1\%\)
Final Answer:
Rounding gives a net increase of about 21 per cent in worldwide e-commerce revenue, so the airline category's price and volume hike lifts the whole worldwide figure by roughly one-fifth.
\[ \boxed{21\%} \]
