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Guy's income increase percentage

Expert replies
by kobel51 » Tue Feb 25, 2014 8:47 am
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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Source: — Data Sufficiency |

by Patrick_GMATFix » Tue Feb 25, 2014 8:57 am
You can answer this really quickly if you remember one thing: if two values change by different percentages, how much their sum (or difference) changes depends on the ratio of values. For instance, if almost all the sum comes from Value 1, then that value's percentage change will impact the overall percentage change the most.

The full solution below is taken from the GMATFix App.

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by Bill@VeritasPrep » Tue Feb 25, 2014 9:27 am
A good example of the easy C trap. Those statements fit together perfectly!


Or do they? :o

A couple of quick examples (I used $100 income and 20$ deductions, then $200 income and $100 deductions) will show that you cannot guarantee a specific percent change.
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by [email protected] » Tue Feb 25, 2014 2:38 pm
Hi kobel51,

DS questions that ask you to focus on the relationships between numbers can sometimes seem "easy", but you have to make sure that you're correct in your assumptions. The best way to do that is to TEST Values and PROVE what the correct answer actually is. Many people who try to "talk" their way through this question and they would end up getting it wrong.

The question asks for the percent change in NET INCOME on Jan. 1, 1989 when his gross income and deductions increased (net income = gross income - deductions). We don't know anything about those values yet.

Fact 1: Gross income increased by 4%

We don't know what happened to the deductions, so there are limitless possible answers.
Fact 1 is INSUFFICIENT

Fact 2: Deductions increased by 15%

We don't know what happened to the gross income, so there are limitless possible answers.
Fact 2 is INSUFFICIENT

Combined, we know that gross income increased by 4% and deductions increased by 15%, BUT we don't know the relative values of either.

For example:
If Gross Income was $100, it would increase to $104
But the Deductions could have been $10 (which would then become $11.50) or $20 (which would then become $23) or any other value...

Since the question is asking for the change in NET INCOME, we run into the same problems that we had before: there are limitless possible answers.
Combined, INSUFFICIENT

Final Answer: E

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