Trouble Calculating Effective Tax Rate

I came across this problem in the Schweser QBank (FRA section) and I’m having trouble comprehending the fundamental logic behind the answer. The questions is as follows:

[question and answer removed by admin]

Can someone please explain to me how it is possible to answer this question with out knowing the scale of the revenue in the various questions. I don’t understand how one can possibly know if the effective tax rate will increase or decrease without any kind of weighting on the revenues.

As always, any help is greatly appreciated!

EDIT: I’m new to this forum and see that the question I posted was removed by admin. Can someone please let me know if I should not be posting practice quesitons from Kaplan on this forum (for my own future reference)? If not, how come my question was removed?


Posting questions verbatim violates Kaplan’s copyright.

You can paraphrase, but not just copy and paste.