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Guy's net income equals his gross income minus his deduction

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Guy's net income equals his gross income minus his deduction [#permalink] New post 01 Oct 2012, 05:25
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The Official Guide for GMAT® Review, 13th Edition - Quantitative Questions Project

Guy's net income equals his gross income minus his deductions. By what percent did Guy's net income change on January 1, 1989, when both his gross income and his deductions increased?

(1) Guy's gross income increased by 4 percent on January 1, 1989.
(2) Guy's deductions increased by 15 percent on January 1, 1989.

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Re: Guy's net income equals his gross income minus his deduction [#permalink] New post 01 Oct 2012, 05:26
SOLUTION

Guy's net income equals his gross income minus his deductions. By what percent did Guy's net income change on January 1, 1989, when both his gross income and his deductions increased?

Given: Net Income = Gross Income - Deductions.

(1) Guy's gross income increased by 4 percent on January 1, 1989. No info about deductions. Not sufficient.
(2) Guy's deductions increased by 15 percent on January 1, 1989. No info about gross income. Not sufficient.

(1)+(2) If Gross Income=100 and Deductions=100, then Guy had decrease in Net Income (since Deductions increased by greater percent than Gross Income) BUT if Gross Income=1,000 and Deductions=100, then Guy had some increase in Net Income. So, we cannot get the percent by which Guy's net income changed on January 1, 1989. Not sufficient.

Answer: E.
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Re: Guy's net income equals his gross income minus his deduction [#permalink] New post 01 Oct 2012, 06:45
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N.Income = G.Income - Deductions

lets say ni= gi -d

from 1 gi => 1.04 gi doesnot take abt Deductions so not sufficient

from 2 d => 1.15 d doesnot take abt Gross income so not sufficient

from 1 and 2

new net income = 1.04 gi - 1.15 d

Using thsi we still cant find the % change in Net income so E
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Re: Guy's net income equals his gross income minus his deduction [#permalink] New post 01 Oct 2012, 20:04
1) No info about Deduction - Insufficient
2) No info about Gross income - Insufficient
1+2) New Income = 1.04 G + 1.15 D
New Income will vary for different relative values of Gross Income & Deductions - Insufficient

Answer E
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Re: Guy's net income equals his gross income minus his deduction [#permalink] New post 04 Oct 2012, 15:09
SOLUTION

Guy's net income equals his gross income minus his deductions. By what percent did Guy's net income change on January 1, 1989, when both his gross income and his deductions increased?

Given: Net Income = Gross Income - Deductions.

(1) Guy's gross income increased by 4 percent on January 1, 1989. No info about deductions. Not sufficient.
(2) Guy's deductions increased by 15 percent on January 1, 1989. No info about gross income. Not sufficient.

(1)+(2) If Gross Income=100 and Deductions=100, then Guy had decrease in Net Income (since Deductions increased by greater percent than Gross Income) BUT if Gross Income=1,000 and Deductions=100, then Guy had some increase in Net Income. So, we cannot get the percent by which Guy's net income changed on January 1, 1989. Not sufficient.

Answer: E.

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PS: 1. Tough and Tricky questions; 2. Hard questions; 3. Hard questions part 2; 4. Standard deviation; 5. Tough Problem Solving Questions With Solutions; 6. Probability and Combinations Questions With Solutions; 7 Tough and tricky exponents and roots questions; 8 12 Easy Pieces (or not?); 9 Bakers' Dozen; 10 Algebra set. NEW!!!

DS: 1. DS tough questions; 2. DS tough questions part 2; 3. DS tough questions part 3; 4. DS Standard deviation; 5. Inequalities; 6. 700+ GMAT Data Sufficiency Questions With Explanations; 7 Tough and tricky exponents and roots questions; 8 The Discreet Charm of the DS ; 9 Devil's Dozen!!!; 10 Number Properties set. NEW!!!


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Re: Guy's net income equals his gross income minus his deduction [#permalink] New post 04 Oct 2012, 17:27
I like those kind of questions because are almost pure logic without to stay too much thinking about numbers.

NI = net income

GI = gross income

Ded= deduction

NI = GI - Ded

1) we have only GI

2) we have only Ded

Both are insuff

Now is the most abstract part that you have to understand very carefully: if GI increase by 4% and Ded by 15% if we do not have a clear anchor point: GI even with a small variation could be larger than Ded so we could have a NI BUT if we have the reverse situation we would not have NI because the Ded could be larger than GI and the latter would disappear without to establish with security NI

E is the answer
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Re: Guy's net income equals his gross income minus his deduction   [#permalink] 04 Oct 2012, 17:27
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